As elections results have been welcomed by markets, they should enter risk-on mode, and valuations have become favourable. Indian households are also under-invested in equities and adding equities to their portfolio should help them build wealth.
The conditions for midcaps and smallcaps to outperform their largecap peers are broadly in place, Vivek Ranjan Misra, Head of Fundamental Research at Karvy Stock Broking, said in an interview with Moneycontrol’s Kshitij Anand.
Below are edited excerpts:Q) What is the range you are looking at for Nifty or Sensex based on the election results? Do you think we are heading for new highs in 2019?
A) We expect a broad-based rally in markets over the coming days which may result in new highs, after which the market may take a breather.
We expect that after one to two quarters, there should be a resumption of the rally in markets as the economy and corporate earnings improve. We expect the market to end the year higher with the Nifty in the range 13,000-15,000 levels.
A) With the incumbent government being re-elected, the interest rate sensitive stocks should get a boost which includes sectors like banks, capital goods, and autos. In addition, sectors like real estate, cement and metals should also do well.Q) As a new government takes center stage, should investors look at select mid & smallcaps for the next 5 years?
A) Yes, this is because the conditions for the mid and smallcaps to outperform their largecap peers are broadly in place. The first condition is that the market should be in a risk-on mode, and secondly that valuations should be favourable compared to largecaps.
As the election results have been welcomed by the markets, they should enter risk-on mode, and valuations have become favourable.Q) What would be your advice to investors for the next 5 years who are probably starting their journey with this new government at the center?
A) The advice would be to invest in equities as part of their asset allocation. The long term economic backdrop for the Indian economy is good, real GDP should grow at an average of 7-8 percent in the long term.
Indian households are also under-invested in equities and adding equities to their portfolio should help them build wealth.Q) Top 5 fundamentally strong stocks which investors can look buying at for the next 5 years?
A) Top 5 stocks to buy are 1) State Bank of India 2) ICICI Bank 3) Larsen & Toubro 4) Maruti Suzuki 5) KEC InternationalDisclaimer: 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.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.