"Our base case does not anticipate a major correction, as India's strong economic fundamentals are likely to provide support," Vivek Goel, the Joint MD at Tailwind Financial Services said in an interview to Moneycontrol.
Goel is bullish on housing finance companies and believes this segment remains an attractive area for medium-term exposure.
"The sector stands to benefit from potential interest rate cuts and government initiatives aimed at affordable housing. Demand for housing loans has remained stable, with asset quality showing resilience," said the investment advisor and Chartered Accountant with more than 10 years of experience.
Do you rule out the possibility of a major correction in the equity markets in the coming months?
A major correction cannot be completely ruled out, given global uncertainties such as the ongoing war, its impact on trade and oil prices, concerns about a Western economic slowdown, risks related to the yen carry trade unwinding, and issues with the Chinese economy. High valuations in certain segments also increase vulnerability to unexpected triggers. However, our base case does not anticipate a major correction, as India's strong economic fundamentals will likely provide support.
Are you bullish on housing finance companies?
Yes, we are bullish on housing finance companies. The sector stands to benefit from potential interest rate cuts and government initiatives aimed at affordable housing. Demand for housing loans has remained stable, with asset quality showing resilience. We believe this segment remains an attractive area for medium-term exposure.
Do you expect the bull market to continue in the US considering the current economic conditions? Do you see more Fed rate cuts after the September meeting?
The US Fed is likely to continue its data-driven approach to monetary policy. With rising unemployment and easing inflation, further rate cuts are probable. Market expectations include a 50-75 basis point cut over the next few meetings this year. While US markets have responded positively to rate cuts, sustained growth will be key to driving a significant rally from current levels.
Do you see a big run-up in the banking space? Are you increasing exposure to the space?
Yes, the banking sector looks poised for growth, driven by strong credit demand, improving asset quality, and rising profitability. With the macroeconomic environment stabilizing and NPA issues largely under control, the sector offers a positive outlook. The banking space, particularly larger players, has lagged in the current market rally. A significant run-up in the near term seems unlikely due to pressures on net interest margins (NIMs) and limited CASA deposit growth. However, from a valuation standpoint, banking is one of the few sectors that still appears reasonably priced. We are gradually increasing exposure, given the stability in asset quality, which offers comfort amidst other challenges.
Do you advise insurance stocks for portfolios?
Insurance stocks offer long-term growth potential, driven by low penetration rates and increasing financial awareness. While recent regulatory changes, such as reduced tax benefits, have impacted performance, we believe the negatives are largely priced in. The sector still presents opportunities, but careful consideration is needed when selecting specific names, focusing on factors like growth prospects, product mix, and distribution strength.
As we are entering an interest rate cut cycle, which sectors are good to buy?
Sectors that typically benefit from rate cuts include real estate, auto, consumer durables, infrastructure, and banking, as lower rates tend to boost demand and improve margins. However, given the context of the market rally, valuations in these sectors need to be carefully evaluated. It's important to focus on specific companies within these sectors that offer incremental benefits and long-term potential.
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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