Daily Voice | Price and time correction to be over by September, says Amit Jain of Ashika Global

I still carry the same view of stagflation for US Economy till the time we have comfort in geopolitical crisis of cold war between Russia & US. In my personal view, by September 2022, US would have passed through the worst phase of this technical recession, unless we see a new war front opening between China & Taiwan or Israel & Iran.

Also, recently you said global stock markets have completed 80 percent of their price correction and 70 percent of their time correction. What does it mean, and do you think there is still a possibility of another deep correction in rest of calendar year?

Also read - Reliance Jio deposits highest earnest money as 5G spectrum auction race heats up

Yes, if you closely observe with each passing day intensity of selling off is cooling off, even FII selling had been at its lowest compared to last one year, where they sold more than Rs 3 lakh crore worth equities in last twelve months. Now from here on each decline may be buying opportunity in selected sectors & stocks.

We are probably in the last leg correction in India's long term bull market. We may further see some time correction in some sectors, but price correction in certain sectors looks at rock bottom. Today, it is a stock pickers markets, where risk reward ratio is favourable for long term investors.

Do you think it is the right time to build a portfolio as you said 80 percent of correction is done? If yes, then what are pockets to pick for a portfolio now?

Also read - More banks look to issue AT1 bonds as investor demand comes back

Yes, long term investors must start buying at current levels. In my view by September 2022, both price correction & time correction shall be over. At this point of time, we see lot of value buying opportunity in Healthcare, Banking & IT sector.

Indian rupee has outperformed other leading currencies in the last one year, falling more than 6 percent against the US dollar but in the same period, Euro has fallen by 12 percent, Pound down by 13 percent and Dollar index gained 14 percent. What are your thoughts and what are the major reasons behind outperformance? Do you expect the rupee to depreciate to around 81-82 levels in coming months?

Yes, it is a pride for each Indian, as INR has outperformed all leading currencies of the World in last one year i.e., Euro, Pound & Japanese Yen. This outperformance is attributed to new records created by Indian exports & strong inflow of domestic money into Indian stock market.

In FY2021-22, Indian exports has touched lifetime high of $676 billion. Now, India's software export is much higher than oil import, which is structurally a big positive for Indian Economy. Also, Indian investors has infused more than Rs 3 lakh crore in stock market, which has almost nullified the ferocious FII selling of last one year. This inflow of domestic investors has averted a negative pressure on INR during this relentless selling by FIIs.

Also read - Rupee is ruffled, but you needn't fret much over the falling currency

Do you think Indian 10-year bond yield to surpass 8 percent mark in rest of financial year 2022-23 and why?

In my view, US 10-year bond yield should stabilise around 3.5 percent to 4 percent by end of this year. As a long-term trend, we have seen Indian 10-year G-sec trades at an arbitrage of 3 percent to 4 percent compared to 10-year US bond yield. Hence in my personal view, Indian G-sec may reach a peak of 8 percent if Dollar index continues to make new high. However, this may be inflection point, from where we will see reversal in medium to long term.

Do you think IT has seen enough correction now and the time has come to pick these stocks?

Also read - Indian economy’s strong fundamentals will help it withstand global headwinds

Yes, IT index is down around 40 percent from its peak 39,600. If you see long term average of IT index it is around 17,000. After recent downfall it is trading around 26,500, which may a good entry point for long term Investors to invest in companies which has visible topline growth. Short to medium term investors can still wait for better pricing in next three to six months.

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.