Annual market-level targets are always tricky to call, but given the structure of the market, my sense is that Sensex will hit the 100,000 mark by the year 2025, Amar Ambani, Senior President and Head of Research - Institutional Equities at YES Securities said in an interview with Moneycontrol’s Kshitij Anand.
Q) Most investors would want to write-off 2020 from their portfolio. Even after rallying more than 50% from March lows most portfolios are negative or at best single-digit returns. What are you advising your clients?
A) What we’ve witnessed since the start of the year 2018, is a long consolidation, following a market rally from mid-2013 to 2017. Just when it seemed that a new up move phase was about to begin, the unprecedented COVID-19 pandemic dealt a ghastly blow.
However, from extreme pessimism in March 2020, the current stock market recovery is indeed incredible, now inching closer to the previous lifetime high.
Notwithstanding the uncertainty on many economic fronts, we believe that the worst is over for the capital markets. Yes, the year 2020 is largely about survival, both health-wise and finance-wise.
It is also an opportune time to tweak and tighten your portfolio for the next bull run. Vikram Samvat 2077 could well be akin to the year 2003, from a market standpoint.
Q) Do you believe we have entered a secular bull run period, despite the economic issues?
A) There are a number of issues to be addressed, whether the impact on small businesses and jobs or our fiscal deficit. But there will always be some issue or the other. A market rally hardly ever expects to have all ticks marked in its favour.
But, what we are seeing is that the situation isn’t as grim as it appeared in late March. More importantly, a host of factors lend credible support to the market cycle: a price and time consolidation of almost three years, global stimulus ensuring seamless capital flow to EMs, low cost of capital, benign commodity and crude inflation, and US Dollar’s sideways or downward direction.
We, therefore, believe that the market will run up ahead of, and in anticipation of, an ensuing economic recovery.
There are a couple of strong growth enablers: one, India’s robust rural market in general, and two, the potential market share gain in global manufacturing stemming from the anti-China sentiment.
Q) What should investors’ expect from SAMVAT 2077? Any target that you have in mind?
A) Annual market-level targets are always tricky to call. But given the structure of the market, my sense is that Sensex will hit the 100,000 mark by the year 2025.
Q) How did you read the result season so far?
A) The sharp recovery for many companies in Q2 FY21 results is nothing short of impressive. Barring few stressed sectors like aviation and multiplexes, the scene is highly encouraging.
While many businesses have grown on a year-on-year basis, many others are only 10-20% below pre-COVID levels. Banks also resumed lending and many didn’t feel the need for high COVID-related provisioning.
The banking sector now looks in much better shape unlike what was feared, given the growing collection efficiency, adequate provisioning, and the fresh capital cushion lent to balance sheets. Q3 will also likely be a good one.
Q) What is your view on small & midcaps? Do you think the outperformance will continue?A) Small and mid-caps have bottomed-out, over the last 3 years. However, with the ongoing health crisis, big businesses have become stronger in general.So any investment in smaller firms has to be on a case-to-case basis. Best to stick with industry leaders in the mid-cap space and invest only if you have a 4-5 year horizon.Disclaimer: The views and investment tips expressed by 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.