I don't think global liquidity can take Nifty above 11,000 in the coming weeks, but if the situation is constantly improving, we may reach 11,000 in a span of 2-3 months, Sumit Bilgaiyan, Founder of Equity99 said in an interview to Moneycontrol's Sunil Shankar Matkar.
Q) After consolidation, the markets again moved upwards in the week gone by despite a continual rise in coronavirus infections in the country. Do you think global liquidity can push Nifty above 11,000?
A) I think the COVID-19 vaccine will be a big impetus for the Nifty to rally above 11,000 as it will ensure smooth 'U-shaped' recovery for all the sectors and eliminated the risk of another lockdown. I don't think global liquidity can take it above 11,000 in the coming weeks, but if the situation is constantly improving, we may reach 11,000 in a span of 2-3 months.
Q) Reliance Industries completed its net debt-free plan well ahead of its target of 2021. Do you think the stock will cross Rs 2,000 mark soon given the expected growth in coming quarters?
A) I believe a lot of positivity about the company has already been factored in the stock price, I expect it to remain rangebound between Rs 1,700-2,000 in the coming months. Weakness in demand for petrochemical business and negative outlook amid weak discretionary spending for retail business will be a drag on the stock price.
Q) Midcap and smallcaps have been trading in line with the benchmarks for the last three weeks. Does it mean that the worst is over and the growth will reflect in the numbers soon?
A) No, I don't think we will be looking at growth over the next 3-4 quarters, it will take at least a year for earnings performance to stabilise. Worst case for business might be considered to be over provided, there are no more lockdown and infections are in control, which I believe is being factored in the stock prices. Many good quality small and midcaps, with limited risks, are available at super cheap valuations, which definitely makes a very good case to buy them for investors.
Q) Do you think the India-China border situation is really a big concern now. And will it have major implications on financials, and corporate earnings and economic growth?
A) I don't think India- China tussle will be a major issue, or rather, both the governments would prefer keeping the relations intact as India and China are heavily dependent on each other. If the situation worsens and relations are impacted, the key adverse effects will be felt by startup fundings, pharma sector, consumer durables, electrical components and machinery and chemicals.
Q) Banking and financials have been the key factor for directional move on either side in the last month or so. What does it indicate?
A) It clearly shows that investors are expecting a 'U-shaped' path to recovery which will keep the financial stress on various sectors limited and not elongated. As the economy has opened up, investors expect that NPA issue will not be a major one, and thus, banking and financial sector will not face severe pain on that front. It will be a key monitorable to track how the various sectors in the country are performing and whether demand comes back to pre-COVID levels.
Q) What are key triggers to watch out for in the coming week?
A) The main thing to watch out will be the COVID-19 cases and COVID scenario in the metro cities. Indo-China resolutions will also be crucial.
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