The Nifty breached a new high in today’s opening trade, while the Sensex closed at record highs on Thursday. It opened today at 21580, up 67 points from yesterday’s close. Raamdeo Agrawal, Joint MD and co-founder, Motilal Oswal Financial Services says after seven years, Nifty is walking comfortably into new highs. The current conditions are extremely conducive after a long time. Apart from the big political event in two months, corporate earnings are more important. He says throughout the slowdown, there has not been a single year of decline in earnings. The currency is also not overvalued anymore.
He says the major theme that is playing out right now is the 'Modi theme' – he moves the market, and it is looked at with optimism.
According to Agrawal, other assset classes have become very muted – whether it is gold, or real estate, fixed income. He feels it is the right time for domestic investors to make a come back.
He says one of the biggest challenges that an investor is facing right now is whether to buy cyclicals, or buy beaten down low-quality stocks. L&T, Agrawal says is one stock which is cyclical, very high quality and large in size. He believes over the next 5-7 years, infrastructure spend in the country is bound to rise. L&T should be bought to ride the higher infra spends.
He feels the auto sector is high quality too, but not deeply cyclical.
Below is the verbatim transcript of Raamdeo Agrawal's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: What is the sense you are getting. Is this break out of that 6,400 range, the beginning of a much bigger breakout? You wouldn’t be surprise if the market gets to 7,000 in a quarter or two?
A: After seven years it is comfortably walking into new high. Conditions are very conducive, in the sense that news flow is – we have a big event ahead in two months, I give more importance to corporate earnings and earnings growth which are very solid through the cycle we have not had one single day of decline in the earnings though earnings was slowed down and now the earnings growth is picking up and forecast for next year is even higher for the earnings. Currency reforms will happen. Currency is no more overvalued, it is at about 61-62/USD, very stable. Therefore, conditions are very conducive, of course Modi moves the market – that is the theme right now, so upcoming event is looked with lot of optimism and one should also not forget that other asset classes have completely become very muted, real estate or gold or fixed income, everything is very subdued. So, after seven years, this is a time for domestic investors to come back to the market and conditions are perfect.
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