Investors had a blast in Samvat 2063

As Samvat 2063 drew to a close on Thursday night, investors would hope for the buoyancy in returns to continue. This is true for all asset classes, including equities, real estate and gold.

Stocks lead the chart with 50 per cent returns, followed by real estate and gold. The markets may be expecting a correction now, but the year has been a spectacular one for those who had put money in stocks. Equities gave a return of 49.64 per cent, the same as in the last three years.

Returns from gold is above 21 per cent but much lower than last year's of 27 per cent due to the appreciating rupee. Returns from the real estate market are between 20-25 per cent.

The common factor affecting an investment decision in this Samvat was the rising rupee which gave 75 per cent return to foreign institutional investors in US dollar terms.

The perception that the rupee will keep rising is drawing more inflows into the Indian markets.  Foreign investors are hedging their dollar risk in rupee among other investment avenues.

The rupee is rising against the US dollar but it has been almost the same against Euro since the last Diwali. The appreciating rupee however has capped the returns from investment in gold.

"The weakening dollar is forcing global investors to move to other investment avenues. They are moving to gold, bonds and equities of other markets including emerging markets," said Vallabh Bhanshali, chairman, Enam group.

Bullion analyst Bhargav Vaidya said gold has so far been considered as a safe investment avenue but that can take a knock if prices keep on rising. "What goes up can also come down," he says.

But others feel gold might continue to give good returns in view of the weakening dollar and rising crude oil prices. Madhusudan Daga, a veteran analysts, said gold will remain a preferred avenue for hedging against inflation.

But everyone agrees on real estate as a lucrative investment avenue. Prices are high at the moment and hence volumes may have gone down, but the growth story will continue.

Pranay Vakil, Chairman, Knight Frank India, said "since the equity market is booming, money from profit booking is coming to the real estate sector."

Niranjan Hiranandani, chairman, Hiranandani Construction, said during the next Samvat also, real estate will give an average return of 15-20 per cent as demand will outpace supply.

He said that demand is rising across all small and big cities. "The only challenge will be high energy prices and deficiency in electricity supply," he said.

The outlook for equities is also quite optimistic. Bhanshali said overseas investors' search for a non-dollar alternative market has changed the valuation criteria.

Market wide returns may not repeat the past trend, but there are still many stocks that are available at decent valuations. A 30-40 per cent annual returns can be targeted in that stocks, he said.