According to Achin Goel, the PMS Fund Manager at Bonanza Group, India’s GDP growth for Q3FY25 rebounded to 6.2 percent from 5.4 percent in Q2FY25 will provide some relief for the investor.
However, due to FIIs selling as well as recent tariffs on imports from Mexico and Canada as well as Chinese goods is weakening the market sentiments, he said in an interview to Moneycontrol.
Among sectors, "real estate is believed to be in a new cycle, offering potential for strong returns due to discounted valuations and supportive company fundamentals. However, a cautious stance is advised on auto space until further sector improvements are seen," said Goel with over 14 years of experience in capital markets.
The bottom or top of the market can't be predicted, but do you believe the worst is almost over?
Investors have experienced significant erosion of wealth since the equity market peaked on September 27. It is challenging for both investors and analysts to predict what will happen next. While the current selloff has resulted in the longest monthly losing streak, it is notably less severe compared to past downturns. Historical data indicates that the worst FII outflows typically recover within a few quarters. With improving fiscal policies, increased infrastructure spending, and a potential rebound in consumer demand, market participants will closely monitor liquidity trends and macroeconomic factors to determine if Nifty’s prolonged decline is approaching its end.
Despite the market correction, corporate earnings have largely met expectations. In conclusion, while the Indian markets appear oversold, they still present smaller pockets of growth opportunities. There is potential for the Indian market to experience an upswing as liquidity conditions improve and global investment flows shift toward emerging markets. Until then, caution continues to prevail in the market.
Is the market still concerned about earnings and economic growth?
The Indian stock market remains deeply concerned about corporate earnings and economic growth. India’s GDP growth for Q3FY25 rebounded to 6.2% from 5.4% in Q2FY25 will provide some relief for the investor but due to FIIs selling as well as recent tariffs on imports from Mexico and Canada as well as Chinese goods is weakening the market sentiments.
Indian market indices have fallen significantly from its peak, reflecting investor scepticism about the sustainability of economic growth. Investors will closely watch Q4 earnings and economic indicators for signs of resilience in corporate performance and economic growth. Also, future guidance provided during earnings reports can build sentiment, with positive outlooks potentially increasing stock prices even if current performance is modest.
Is it the right time to buy real estate stocks?
Deciding whether it's the right time to buy real estate stocks depends on several factors, including market conditions, economic trends, and personal investment goals. Lower interest rates can make borrowing more affordable, potentially boosting demand for real estate. Real estate investments can also serve as a hedge against inflation, as property values and rental incomes often rise with inflation.
The Indian real estate sector has shown resilience and growth, with significant investments in 2024. This suggests a promising environment for real estate investments in India. Real estate is believed to be in a new cycle, offering potential for strong returns due to discounted valuations and supportive company fundamentals. The global real estate market is experiencing a recovery phase, with strengthening demand and improved liquidity expected in 2025.
Are you still cautious about the auto and auto ancillary space?
The Indian automotive sector is navigating mixed signals as domestic manufacturers enhance electric vehicle (EV) infrastructure amidst competition woes from new entrants. Tata Motors plans to expand its charging network significantly, aiming for 400,000 charging points by 2027. However, Tesla's impending entry has raised concerns among local automakers. The auto ancillary sector faces rising costs and and concerns over potential US tariff hikes, necessitating innovation and strategic investments.
The EV sector's future depends on addressing infrastructure gaps and competitive threats. Market trends indicate a decline in overall passenger vehicle sales, partly due to sluggish demand in urban areas where consumers are awaiting new product launches. A cautious stance is advised until further sector improvements are seen.
What is your take on the cable and wire segment, especially now that UltraTech Cement is entering this space?
With the recent entry by UltraTech Cement in the cable and wire segment (C&W), we feel that this comes as a mixed bag feeling for what is in store for the sector and the players in it. UltraTech’s entry could result in slashing of valuations of existing players. However, UltraTech might not see any business coming to them in this segment for atleast 2 years, allowing existing players to strategise market share protection. Cables and wire segment has over 400 players including SMEs, so it is usual to see a new entry by a company with deep pockets.
Are you betting on large NBFCs and PSU banks after the recent correction?
Large NBFCs could benefit from potential rate cuts by the RBI, as these reductions can lower their funding costs without immediately impacting loan pricing, potentially boosting their net interest margins (NIMs) and profitability. While both large NBFCs and PSU banks have potential, the investment strategy should be nuanced. We will go for the large NBFCs that are currently available at attractive valuation, ability to maintain asset quality, exhibit robust growth in advances, and have the capability to maintain their profit margins. In case of PSU banks, they have improved significantly but may face growth convergence challenges. Selective accumulation during corrections could be beneficial.
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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