Markets have been holding good despite massive sell-offs by FIIs, thanks to robust retail SIP-led DII flows. Much has been discounted and priced; however, a 10-15 percent move either way can't be ruled out any time, Santosh Joseph, Founder and Managing Partner of Germinate Investor Services LLP, told Moneycontrol in an interview.
But, if the Ukraine-Russia situation is resolved in the days to come, it may actually provide a relief rally, says the veteran banking, insurance and asset management professional. "There's a good chance that the markets could hit fresh highs in CY22."
Do you think the market can hit a fresh high in the rest of CY22? Will a resolution of the Ukraine-Russia crisis be a reason for a fresh high?
There have been several corrections in the past few months factoring in most of the negative news such as the Ukraine-Russia war, possible new variants of the Coronavirus, high inflation etc. Oil price hikes and other supply side concerns that cause higher inflation have already been priced in as well.
Therefore there's a good chance that the markets could hit fresh highs in CY22 if the Ukraine-Russia situation finds a resolution in the days to come and it may actually provide a relief rally.
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Most managements feel the price hike they have taken is not enough and are not sure about further price hikes. So, what are your earnings expectations for Q4FY22 and the second half of FY23?
Earnings have already taken some beating due to the Omicron wave in December and January. Monopolies with strong brand recall may find it easier to increase their price further but many others might not be able to do so.
In general, this crisis-led inflation will likely impact margins and overall demand.
Do you think the US, which is currently facing a stagflation issue, could get into recession mode? Has the market priced in this risk?
It's hard to say. Inflation at some level is good and shows economic activity pickup. Markets are extremely volatile on a daily basis.
Due to this any data point that is being put out sways the markets. We will have to watch another 3-4 quarters to figure out this situation.
As we soon enter FY23, what are the sectors to buy and hold, and what are the sectors to stay away from?
There has been a lot of sectoral reallocation in the last few months. IT, BFSI, Metals & Industries seem good and have picked up.
Real estate, Auto and Consumption should see better days, especially after two years of subdued sentiments.
What are the challenges for the market in the coming financial year?
Interest rates and inflation are two key challenges that the market will face this year. This will have a direct impact on growth and earnings and will be the reason for volatile markets.
Do you think the worst has already been discounted in stock prices?
Markets have been holding good despite massive sell-offs by FIIs thanks to robust retail SIP led DII flows. Much has been discounted and priced, however a 10-15 percent move either way can't be ruled out any time!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.