Gaurav Garg, Head of Research at CapitalVia Global Research feels Nifty Bank is likely to do well in Samvat 2078, especially after the underperformance over the last few years. "I am expecting Bank Nifty to touch 48,000 - around 20 percent from current levels," he said in an interview to Moneycontrol.
Nifty50 could touch 21,000 by next Diwali and Bank Nifty will lead this rally, said Gaurav Garg who has more than 10 years of experience across industries and is actively involved in valuation of companies through various models and developing market research reports.
Edited excerpts:
Q: What is your reading of the market (gaining more than 36 percent since Diwali 2020) and how will it look like by Diwali 2022?
The market is likely to continue its bull run and we might see decent upside from the current levels. However, from hereon, sectoral rotation can be expected and current low interest rate regime might help rate sensitive stocks to do better. I expect Nifty50 to touch 21,000 level by next Diwali and Bank Nifty to lead this rally.
Q: The Midcap and Smallcap indices outperformed frontliners, rising 65 percent and 77 percent, respectively since last Diwali. What is your outlook for this segment?
Indeed, Smallcap and Midcaps have outperformed as compared to leading indices, however, investors should try to book profits at higher levels as valuations are higher and we might see some sort of consolidation over next few quarters. I believe largecaps might give stable returns over the next few years, and investors should look for a diversified portfolio of largecap.
Q: All sectors participated in the market run since last Diwali. What are the sectors that could be in the limelight by Diwali 2022 and why?
For Diwali 2022, Nifty bank is likely to do well as we have seen significant underperformance in it over the last few years. I am expecting Bank Nifty to touch 48,000, which is around 20 percent from current levels. Realty, PSU banks and selective pharma companies are likely to do well till next Diwali. Private banks, on the other hand, might surprise the Street with stellar earnings in the next few quarters as advances and NIM (net interest margins) might improve significantly.
Q: The primary market saw record fund raising and record number of IPOs since last Diwali. Do you expect the momentum to continue?
Last two years have been spectacular for primary markets and I am expecting that a similar show might get repeated this year too. Many IPOs are lined up which have massive potentials to give impressive listing gains which include big names like LIC, NSE, Paytm and many more. We expect more than Rs 70,000 crore of fund raising in the next year, which might be comparable to 2021 as investors will latch on to only those IPOs that are priced attractively and where companies operate in a comfort zone in terms of valuations.
Q: What are the top 5 key events that will support market sentiment and top five risks that can spoil the market sentiment by Diwali 2022?
Higher crude oil prices might hurt domestic market sentiments as I am expecting more upside from current levels of $85 a barrel. Tapering of interest rates in US might also trigger liquidity shift from equity to other investment instruments including fixed asset.
Election in Uttar Pradesh are lined up in February-March 2022 might also affect market sentiments. Other bigger events are Union Budget 2022 where we might see merger of PSU units which include Railways.
Q: Which one should should investors choose between - Paytm and Sapphire Foods IPOs for next week, and why?
I believe Paytm's IPO might be a blockbuster for primary markets as initial share sale of Paytm parent One97 Communications is scheduled to hit the market on November 8 and is going to be the largest the country has seen so far after Coal India, Reliance Power and GIC. I will recommend going for Paytm as I am expecting decent listing gains in Paytm compared to Sapphire Foods IPOs. Paytm is a digital wallet-based platform services like lending, banking, money transfer, insurance, wealth advisory, e-commerce, travel and event bookings, gaming, and obviously recharge and bill payments. It also offers software and cloud services to merchants. Its deep penetration in India might turn out to be a sustainable business.
Q: Can you name two stocks which you are bullish on for next one year?
Maruti Suzuki is one of the India's leading passenger vehicle manufacturer look technically strong from current prices. If stock is able to cross Rs 8,000 level, we might expect it to touch its all-time high which is close to Rs 10,000. The stock is forming reverse Head and Shoulder pattern in monthly chart showing strong demand zone in the zone of Rs 7,200-7,400. In 2022, Maruti is likely to launch WagonR in electric segment will boost overall sentiments of company.
Bharti Airtel has witnessed decent surge in average revenue per user (ARPU) which has now touched Rs 153 and better performance in Africa Business is also witnessed. Technically stock looks strong on higher time frames and has sustained above important support levels. Also, the competitive intensity in the telecom sector has reduced drastically over the years with the major chunk of business getting captured by 2 players.
Q: What could be listing expectations for Nykaa and Fino Payments Bank after closing IPOs?
Nykaa's grey market premium (GMP) is above 60 percent meaning we might expect levels of Rs 1,700 on the listing day. What looks good for Nykaa is its ability to maintain a healthy working capital cycle and inventory management which is important for the long-term sustainability. Fino Payments Bank is also one of preferred bets as financials look strong and it deals with many current accounts and savings accounts (CASA), issuance of debit card and related transactions, facilitating domestic remittances. However, not enough data is available for GMP of Fino Payments Bank, therefore it is tough to comment for listing gains. But I am expecting at least 25 percent of gains.
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