The outperformance of banking has seen in the market so chances of moving closer to 33,200 can be seen. If it sustains above that then further progress will be seen.
Since the corrective wave currently unfolding is sideways, the chances of moving towards 12,100-12,300 are higher. Following this, we may see a correction to 11,600 levels, said Vishal Wagh, Head of Research, Bonanza Portfolio in an interview to Moneycontrol's Sunil Shankar Matkar.
Q: Are current valuations overstated since the Sensex is trading at a record high or do you see the rally continuing in short term? Do you feel the Nifty may hit 12,300-12,500 first before seeing major correction?
Post corporate tax cut market rallied and discounted probable gains. The results are showing stagnancy in topline growth. The chocked circle of growth due to stagnancy in topline is major concern now. That is one of the valuations looking very stretched.
Markets are in longer time corrective wave. The wave currently unfolding is sideways. So chances of moving towards 12,100-12,300 are higher. Post that we may see a correction till 11,600 zone. If the market fails to hold around those levels then the deeper correction is due.
Q: Is it the right time to make investments in midcaps and smallcaps?
Only select midcaps and smallcaps are participating in the rally. But their respective index, on the longer time frame, are underperforming. It is advisable to be in the stocks which are outperforming major index. And till the time midcap and smallcap laggard, one should avoid large exposure in lagging stock in the segment.
Q: What sectors do you prefer to invest now, which will give hefty returns by next year?
We would like to see some downside in FMCG and consumption basket to take few best buying bets. The private banking is doing well and the outperformance from this sector may continue.
Q: What are the top four stock ideas which can give strong returns in the next 1-2 years?
HDFC Bank is strong and stable, NPAs are in control due to which assets quality is one of the best in the industry. Exposure to the retail is adding more strength in the stock. We are expecting a 20 percent CAGR return in the stocks in coming years.
Voltas has a good product range, geographical presence and dominance in the market, which are its key and stronger points. We expect a CAGR growth of 30 percent for the next two years.
In the case of Dabur India, decent quarterly numbers, higher growth in rural areas and consistency in urban area are trigger points. There are expectations of CAGR growth of 20-25 percent for the next two years.
The current market move has been strengthened by Reliance Industries, future value unwinding is due in the form of the listing of Jio and business buying by ARAMCO. Appealing and innovative products from Jio is making the industry drastically shift from offline to online business. The stock is consistently outperforming the major index. We are expecting further CAGR 15-20 percent.
Q: Will the Bank Nifty be able to hit 35,000 soon?
The outperformance of banking was seen in the market so chances of moving closer to 33,200 can be seen. If it sustains above that then further progress will be seen.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.