Notwithstanding government efforts to depress gold demand and equity markets scaling new highs, the yellow metal has managed to deliver better returns than equities in the first 11 months of this year.

Gold in dollar terms delivered 14 per cent returns this year till November against the Nifty’s 11 per cent and the Sensex’s 13 per cent.

The return from gold in rupee terms would be much higher as the rupee depreciated by 3.2 per cent against the dollar. As a thumbrule, gold prices rise when the rupee depreciates against the dollar.

With the prevailing global economic uncertainty, the US-China trade war and the US Presidential elections next year, gold may continue to see good demand as investors seek safe havens. Jaideep Hansraj, Managing Director & CEO, Kotak Securities, said the Nifty delivered double-digit returns this year mainly led by a handful of constituents, while the broader market is still reeling with both mid- and small-cap indices showing negative returns in the calendar year to date.
Market-economy disconnect

The disconnect between equity markets and the economy could stay for some time as high-frequency indicators are not showing any signs of improvement whereas markets could remain at elevated levels on hopes of certain sops expected in the forthcoming Union Budget, he said.

Hansraj believes privatisation could be a big theme next year with the strategic sales of BPCL, Concor and Shipping Corporation as these can provide the government with ₹80,000 crore and set the ball rolling for other big-ticket divestments.

If the Government were to privatise all non-strategic listed PSUs, excluding banks and inancial PSUs and keep 51 per cent in five strategic PSUs -- ONGC, Coal India, IOC, BEL & Hindustan Aeronautics -- then it could fetch ₹5 lakh crore over the next few years.

Kotak Securities expects the Nifty-50 to touch 13,400 points by the end of next year against Friday's close of 11,921 while the target for the BSE Sensex would work out to 45,500 against 40,445 on Friday.

The happenings in the equity market this year taught investors many lessons, including the need to avoid poorly governed companies with weak balance sheets ad poor return ratios even at the cost of attractive valuations.

Companies having deep value but lacking the ability to show revenue and earnings growth in future could be value traps and worth avoiding, said Hansraj.................BL