IT, Pharmaceuticals, FMCG, Real Estate, Defence are the most overvalued sectors at this moment of time, according to Amit Jain, the co-founder of Ashika Global Family Office Services. Hence, "I am not taking any bets in these sectors," he said in an interview to Moneycontrol.
However, from a value investing perspective, "I see value in PSU and PSU bank for medium to long term perspective at current levels," said Amit, who has over 14 years of experience in the Indian Banking & Financial Services Industry.
On the current market situation, weak earnings and external pressures indicate that the Nifty 50 may face ongoing challenges rather than a swift recovery in the near term, he said.
Do you expect the market correction to continue, with another loss of around 1,000 points on the Nifty 50 (from the 24,400-24,500 levels)?
Yes, I am continuing to be cautious on the Global and Indian Stock Market as shared in my last interview with you on September 8, 2024. Current market sentiment is bearish, with critical support around 24,000 which also maybe at risk. Geopolitical tensions and FII outflows are adding to volatility. Additionally, technical indicators show resistance levels are hard to break, suggesting further declines may be likely. Overall, weak earnings and external pressures indicate that the Nifty 50 may face ongoing challenges rather than a swift recovery in the near term.
What are the major reasons behind this market correction? Is the market more concerned about domestic factors than global ones?
The recent market correction in India can be attributed to several key factors such as: Overvaluation of Global and Indian stock market led to profit booking, creating selling pressure. Additionally, global influences, such as increasing Geopolitical risk, possible recession in the US economy in 2025, increasing US Bond yields are major factors for this recent correction in the Global and Indian Stock Market. These external factors have contributed to a cautious sentiment among investors. While domestic issues play a role, the impact of global economic conditions is significant, leading to a more complex market environment. Overall, the interplay between domestic and global factors is driving the current correction in Indian equities.
Also, Indian Markets is negatively impacted with domestic factors such as new SEBI guideline for F&O trades, increasing inflation, declining demand in automobiles and FMCG sector & upcoming Maharashtra elections. All these factors may keep any large upside move on Nifty under cap.
Do you think that, aside from a few banks, the overall quarterly earnings season has been weak?
The current quarterly earnings season in India has been disappointing, with many companies missing profit and revenue expectations. While some banks have shown resilience, sectors like Automobile, & FMCG are struggling with their earnings growth. Most of the Mid-cap and Small-Cap companies are not able to meet the streets expectations and as a result we have seen a crash in Mid-cap and Small-Cap in the last three months. I am attaching a synopsis of the stock price decline for the reference.
Which sectors should be considered for investment or are currently looking attractive during this market correction?
At this moment, there are very few sectors which give a proper blend of value and growth at current prices. However, from a risk- reward perspective, I will prefer value investing at this moment rather than chasing growth which maybe subdued for most of the Mid-Cap and Small-Cap companies for the next 2-3 quarters. From a value investing perspective, I see value in PSU and PSU bank for medium to long term perspective at current levels.
Which sectors are still considered expensive despite the recent correction?
In my view, IT, Pharmaceuticals, FMCG, Real Estate, Defence are the most overvalued sectors at this moment of time. Hence, I am not taking any bets in these sectors.
Do you believe that fundraising via IPOs in 2025 will be better than in 2024? Will the current correction delay IPOs like those of Swiggy, NTPC Green Energy, and others?
I believe that the IPO fundraising landscape in 2025 will likely surpass that of 2024, with projections indicating a robust pipeline as market conditions stabilize. However, the current market correction may lead to delays for high-profile IPOs. High-profile companies may prudently choose to defer their public offerings until more favourable conditions emerge, reflecting a strategic approach to capital raising amid prevailing uncertainties. Overall, while 2025 holds promise, the immediate outlook is tempered by current market dynamics.
Disclaimer: The views and investment tips expressed by investment 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.
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