We could hit 11,000 in December provided state election results are as per expectations. Any nasty surprises could derail this rally and take markets to lower support levels.
Nifty could hit 11,000 in December provided state election results are as per expectations. Any nasty surprises could derail this rally and take markets to lower support levels, Dipan Mehta, Director, Elixir Equities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) We witnessed a strong November expiry and a steady rollover towards December series, but since then the momentum fizzled out for markets. Do you think we could hit 11K in this series?
A) Yes, we could hit 11,000 in December provided state election results are as per expectations. Any nasty surprises could derail this rally and take markets to lower support levels.
There is a ‘tug of war’ in the market with political uncertainty pulling the markets down and improving fundamentals and resurgence of foreign institutional investors (FII) buying pulling it up.
Q) Indeed we saw a huge rally in the benchmark indices but the broader market got a muted responses. Do you think the pain in the mid-cap and small-caps are here to stay in 2019 as well?
A) If Sensex and Nifty are buoyant, I think midcaps will outperform in 2019. The companies in the broader market are predominantly domestic focused and better economic trends driven by better capex cycle, improved rural demand and steady interest rates should rekindle investor interest.
Q) After a muted 2018, what are your predictions for the year 2019?
A) Difficult to say as election results is the ‘big elephant’ in the room. Although, in the medium to long-term, there may not be any impact. But, in the short-term, its effect will be felt. It is not so much the fundamentals that are tested it is the sentiment.
Q) The large part of the recovery in the year 2018 was led by heavy index weights while on the other small & mid-caps remain muted throughout the year? Do you think the broader market is likely to remain under pressure?
A) The broader market will remain under pressure depends on political setup, oil prices and RBI policy. The markets has the legs and liquidity support to move up significantly if all of these three factors are positive.
Q) 2019 strategy: Top five fundamental safe stocks which are good buys at current levels for a holding period of 1 year?
A) We would not like to name individual stocks but private sector banks, strong corporate-backed NBFCs, consumption-oriented stocks in sectors such as media, building material, aviation, auto, FMCG and appliances should do well.
Select stocks in pharma and IT which have a differentiated IP led business model should do well.
Q) Which sectors are likely to hog limelight in the year 2019?
A) Banks and NBFCs as the concerns surrounding the sector reduce and NPA provisioning cycle comes to an end.
Q) Do you think rupee will continue to appreciate in the near term?
A) If oil prices do not spike beyond $70 per barrel. INR will be stable with an upward bias. Our view is that $70 per barrel is the line in the sand for India. Below that, it is manageable; above that, the pain emerges.
Q) Any sector(s) which you think could turn out to a dark horse in 2019?
A) Media and entertainment as election-related advertising will benefit publishing houses and new channels.
Q) What should be the ideal strategy for investors for the next one year? How much (in terms of percentage) should be allocated towards equities, fixed income, gold etc.A) Well, the portfolio construction will depend upon the risk appetite and the near-term cash flow requirement. It has been our advice to keep one year’s income in fixed and the balance in equity assuming there are no capital purchases for the next 3 years.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
Assembly Elections 2018: Read the latest news, views and analysis here