A conservative approach is best for wealth allocation in Samvat 2080, says Shiv Sehgal, president and head at Nuvama Capital Markets. "But, given the dynamic nature of the Indian market, one can never be not bullish on equities," he shares in an interview to Moneycontrol.
Sehgal's priority list consists of largecap equities, bonds and gold as he believes they offer the most promising prospects. For the yellow metal, he believes, Samvat 2080 could mark the beginning of a new era.
Sehgal, who served the investment management and financial services industry for close to two decades, maintains a positive outlook on the new-age space since last Samvat and continues with the optimistic stance. Excerpts from the interview:
Do you expect domestic flows to remain strong in Samvat 2080, given the volatility in FII inflow?
Yes, that's definitely an ongoing trend but not just for Samvat 2080. It is here to stay. Financialisation is a theme for the Indian market that is here to play out. This year, benign domestic liquidity conditions should ensure strong and sustained DII flows.
However, global uncertainty are likely to keep FII flows volatile as we are also seeing global passive allocation move from equity to debt given higher yields environment.
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Do the mid-smallcap space still look expensive?
The Small and Mid-Cap stocks (SMID) space appears to be notably quite expensive. Beyond domestic inflows, the earnings cycle plays a pivotal role in sustaining these valuations. Currently earnings are predominantly fueled by lower input prices, leading to margin expansion rather than robust demand.
With the peak of these favourable conditions behind us, midcap valuations may be exposed to risks. However, the ongoing influx of new SMID funds and continued interest in the sector could keep valuations elevated for longer.
The key is SMID outperformance is always bottom up stock picking. In this regard, abundant opportunities still exist. We continue to uncover hidden gems that are poised to deliver long-term value and emerge as outperformers in the long run.
Do you expect good margin expansion in autos, but slowdown in consumption space in the coming quarters?
In the automotive industry, a significant portion of margin expansion has already been achieved. However, unlike other sectors, the downside risks to margins are comparatively lower in the automotive filed.
Do you think Samvat 2080 will be a better one for equity markets despite the likely risk factors?
The assessment of whether the upcoming year will be better or worse in the equity markets depends on the specific segment one is considering to invest in. In my view, it is likely to be a more favourable year for largecaps. However, despite the ongoing consolidation in midcaps, I maintain a bullish outlook in that space as well.
Where do you want to invest your money in Samvat 2080?
For Samvat 2080, I prefer a conservative approach to wealth allocation. However, given the dynamic nature of the Indian market, one can never be not bullish on equities. My priority list consists of large cap equities, bonds and gold as I believe they offer the most promising prospects.
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Will gold be the best bet for Samvat 2080?
Yes, gold often proves to be a resilient asset during uncertain times, especially when USD is also losing it's sheen as a safe haven. Hence, Samvat 2080 could mark a new era for Gold.
Are you taking exposure to the new age space, especially after September quarter earnings season?
We have maintained a positive outlook on the new age space since the last Samvat. Our key thesis at that time centered around two pivotal factors: i) A shift towards profitability and reduced cash burn, contributing to the sustainability of these business models and ii) The peaking global rates cycle.
Both the factors still hold true and hence we continue to remain pertinent on our optimistic stance on the new age tech space.
Do you think domestic oriented sectors are still better for investment than export-oriented sectors?
Yes, our population of 1.4 billion makes us a strong consumer economy, significantly reducing uncertainty in growth for domestic oriented sectors. On the other hand, the export-oriented sector faces numerous uncertainties and vagaries.
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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