Amit Jain, co-founder & CEO, Ashika Wealth Advisors, sees mid-size IT companies, with a focus on artificial intelligence, pharma, chemical and semiconductor firms as disrupters of the future.
In an interview to Moneycontrol’s Kshitij Anand, Jain says any correction in the market may be an excellent opportunity to invest in mid-sized companies in these sectors, as most of them will create new multi-baggers in the ongoing 2030 decade. Edited excerpts:
Both the Sensex and the Nifty50 hit record highs and then saw some profit-taking in the previous week. What are your views?
Last week, the market surpassed 15,900 levels, and from this point, we may see another 5 percent to 10 percent move but that point may be an intermittent top for the market.
From that level, the market may take a short breather before taking the next directional move. After selling in April and May, FIIs have again started buying Indian equity in June, which apparently looks good news for retail Investors.
We may see the Nifty50 touching the 17,000-mark if this global liquidity continues to chase the Indian market by end of this year.
For the third month, mutual funds saw inflows, a positive sign for Indian markets that suggest that there is a new line of defence that has emerged. What are your views?
Yes, I agree that HNIs and retail clients are back after a long gap through the mutual fund (MF) route. As per the data released by the Association Mutual Funds in India, equity mutual funds witnessed a net inflow of Rs 9,115 in March 2021, Rs 3,437 in April and around Rs 10,082 crore in May 2021.
Earlier, equity MF schemes witnessed outflows for eight months continuously from July 2020 to February 2021.
This can be a shock absorber for the Indian market if we see any drastic selling by foreign investors (FIIs) in the short term. I personally suggest even if we see some major correction in the Indian market, then it is buying opportunity for Investors.
Which sector/stocks will fall in the category of disruptors?
Mid-size IT (AI-focused), pharma, chemical and semiconductor companies may be a disrupter keeping year 2030 in mind. Any correction in the market may be an excellent opportunity to invest in midsized companies of these sectors. Most of them will create new multi-baggers in the ongoing decade of 2030.
With markets trading at record highs, what should be the strategy of investors? Should they wait for a dip to deploy money in stocks or mutual funds or be aggressive and add more money at these levels?
At this valuation, only long-term investors can invest in selected sectors and stocks. Retail and HNI investors with medium-term prospects can wait for a better entry point.
On the broader market, we may see some profit-booking by institutional investors. We may also see some price correction, and time correction during the second half of the calendar year 2021.
What are the factors fuelling the rally on D-Street?
There is only one factor that is driving this global market rally, ie liquidity. Global banks have infused almost $9 trillion in the world economy in the last year post-Covid-19 outbreak.
This amount of money printing can inflate any asset class be it equity, real estate or bitcoin. This excessive money in the system may create inflation in short term, which will keep the equity market under check from any big move.
In my personal view, global central banks have not solved the basic problem of the global economy post-Covid-19 outbreak ie jobless GDP growth coupled with high inflation numbers. They have just postponed the problem by printing new money.
This newly printed money should be utilised for creating jobs, rather than creating asset bubbles. These bubbles may burst soon once we see intensified trade wars or geopolitical tensions between the US, China and Russia.
Which sectors will lead the next leg of the rally on D-Street?
At this valuation, we see some value in selected PSUs, automobile, metal and FMCG sectors may continue to do well in the medium-term.
Things investors should avoid when markets trade at a record high?
Whenever the market is at a record high, then investors should always evaluate for rebalancing across asset class, geographies and sectors to hedge their risk in one asset class or geography.
Also, timely booking of profit is equally important as timely investing. Hence don’t forget this new principle of investing.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.