Vinod Nair, Head of Research at Geojit Financial Services believes the market is in an oversold territory, and positive developments could ease caution. "Sentiment around Omicron has improved, and importantly, a hawkish view by US Federal Reserve chairman Jerome Powell during the week did not affect India and emerging markets (EMs) much."
He expects Star Health's listing to be weak due to low subscription. "However, the insurance industry is expected to do well on a medium to long-term basis," says the 20-year veteran in equity research.
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Q: What do you expect from the RBI monetary policy scheduled for next week? Do you expect the central bank to maintain the rates till 2022?
We expect the RBI to maintain its accommodative stance and hold the rates, despite the rebound in economic growth. Although the figures are encouraging, the uncertainty surrounding Omicron is a concern. It would be early to say that the recovery is broad-based, and the Central Bank would continue with the supportive measures.
However, rates will rise in the future in context with rising global yields. Monetary policy will normalise due to economic stability and rising inflation as the base effect wanes off from November.
Q: Do you expect further growth in industrial output in October after 3.1 percent growth in September?
Yes, economic output is expected to rise due to a further opening up of economic activities. Q3FY22 and Q4FY22 will be supported by festive demand, agriculture production and reduction in domestic and global supply constraints.
Q: Do you think the lower-than-expected IPO subscription figures will dent the listing of Rakesh Jhunjhunwala-backed Star Health next week? Will it mirror the listing day performance of Paytm?
It is possible that the listing will be weak due to low subscription, however, it cannot be compared to Paytm, given the differences in business parameters. The insurance industry is expected to do well on a medium to long-term basis. The company's short-term business is impacted due to Covid and need for funds to sustain capital. We can expect stability in business during CY2022, and the company has strong penetration and brand value in the retail segment.
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Q: Are you bullish on RateGain Travel Technologies, and is it rightly priced at Rs 405-425 per share?
Currently, it is seeing losses due to an overall weak hospitality industry globally. Hence, we are cautious on the stock being priced above fair valuation. This may be vulnerable to a current cautious market. However, the industry outlook is expected to exponentially improve in 2022-24, which would improve the outlook for the company. The business model of the company looks vibrant, in terms of the number of transactions, subscription and hybrid.
Also read - Rakesh Jhunjhunwala-backed Metro Brands IPO opens on December 10, closes on December 14
Q: Do you expect the market to close the year above the 18,000 mark on the Nifty50, and why?
The current market is on an oversold territory, positive developments can change the ongoing cautious tendency. Sentiment around Omicron has improved, and importantly, hawkish view by US Federal Reserve Chairman Powell, during the week, did not affect India and emerging markets (EMs) much.
Volatility has been seen in developed markets, but it is not heavy. This is a positive trend indicating that the equity market has factored a change in policy. Hence, a hawkish measure in the coming Fed meeting is unlikely to impact the market, giving way for positive direction in the near future. Our technical analysis upper target for the Nifty50 is 17,600-17,780 for the short term.
Also read - 100 smallcap stocks rise between 10-122% while market falls nearly 4% in November
Q: Do you think concerns over Omicron will hit market sentiment further or will the market ignore those fears?
The market had taken a hit, and currently, it is reverting. It may be early to comment, however, preliminary views are not very hazardous.
Q: Metals were the biggest loser, with 13% loss in the last one-and-half-month, and other key sectors like Auto, Bank, Energy, Financial Services, and Pharma declined 6-8%. Is it time to overboard on these sectors and what stocks can one buy now after the recent correction?
As the market is expected to see a recovery rally, all of the above sectors will perform well. On a medium-term basis, we feel the best rebound can be in sectors like Finance, Pharma, Auto and IT. Other than IT, these sectors have been consolidating in the past 3-4 months. Their outlook is better for 2022, and valuations are fair.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.