With both the Sensex and gold trading near historic highs, investors face a tough choice while balancing their portfolios. The global uncertainties and sustained market volatility are only adding to the investor’s dilemma. As these two popular asset classes are trading at elevated levels, here is a step by step analysis of the gains over last 1 year and the relative return from each asset class
Sensex nears 80,000 with strong 1-year gains
The Sensex has shown significant strength, currently trading close to the 80,000 mark. Over the past year, the Index surged by over 25%, adding 16,111 points to its value. In 2024 alone, year-to-date returns have reached 11.02%, reflecting the resilience of Indian equities in a volatile global economic environment.
The benchmark index also achieved a lifetime high of 85,978 points in September, showcasing robust investor confidence in Indian markets, driven by strong corporate earnings, economic growth, and foreign investment inflows.
Gold outshines as a safe haven savings instrument
Gold, meanwhile, continues to hit record levels, with 24-carat prices surpassing Rs 80,000 per 10 grams. Year-to-date, gold prices have surged 31%, an increase of approximately Rs 14,300 per 10 grams, driven by rising demand amid inflationary pressures and geopolitical uncertainties.
Today, on the Multi Commodity Exchange (MCX), the December futures contract for gold hit an all-time high of Rs 79,635 per 10 grams. The metal’s enduring appeal as a hedge against economic instability remains strong, particularly with rising tensions in the Middle East, energy concerns, and interest rate hikes by global central banks adding to investor caution.
Experts on Investment Outlook
Commenting on the investment outlook Rochak Bakshi Founder & CEO of True North Financial Services said that the Indian stock markets and gold have both given good returns to investors over the past one year. The BSE Sensex has returned 23% between last and this Diwali. The total equity asset under management has grown by an impressive 66% in the last one year, a testament to the growing retail participation in mutual funds and its preference as an asset class. This is also symptomatic of the growing interest from investors in tier 2/3 cities.
Bakshi also added that The Indian stock market, despite the temporary blips, continues to be on a strong footing. The ever-increasing retail participation will drive the market in the future. The year gone by has been fantastic for returns and as investors we have essentially borrowed returns from the future. Our expectation for returns in the coming year should be much more grounded. This in itself is not bad as the markets need to consolidate before any upwards movement again.
Commenting on the same Atul Parakh, CEO of Bigul said that for Diwali 2025, Sensex emerged as the more attractive investment opportunity compared to gold, despite both assets showing promising potential. Gold is expected to reach impressive levels. In contrast, Sensex, driven by anticipated rate cuts from both RBI and the Federal Reserve, robust domestic consumption, and strong earnings growth, is projected to reach higher levels by Diwali 2025.
Parakh also added that the Indian equity market’s fundamental strength, supported by political stability and relative currency stability, provides a more compelling risk-reward ratio. Though both assets face near-term headwinds, including geopolitical tensions and US policy uncertainties, Sensex’s structural growth story and multiple positive catalysts make it a more lucrative investment choice. However, investors should consider a staggered buying approach and maintain strict profit-booking discipline.
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