Market fall a short-term disappointment, stable govt key to recovery, says Feroze Azeez of Anand Rathi

Feroze Azeez, Deputy CEO at Anand Rathi Wealth

As BSE-listed companies erase market-cap of nearly Rs 40 lakh crore on June 4 due to underwhelming vote tally for Narendra Modi-led National Democratic Alliance (NDA) compared to exit poll estimates, Feroze Azeez, Deputy CEO at Anand Rathi Wealth in a conversation with Moneycontrol said that he expects some degree of disappointment to prevail in the short-term.

However, Azeez ruled out any catastrophic fall in the medium-term, terming this panic as a knee-jerk reaction to exit poll estimates.

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"In the last 10 years, markets have fallen 10 percent by around 32 times. This is just a usual market practice wherein they have fallen 10 percent twice or thrice every year. So if Nifty gives 11-12 percent returns over the next 5 years, it becomes more certain that an equity mutual fund holder could double their money during this period," he explained.

However, Azeez pointed out that a stable government formation will help Nifty outperform earnings growth going forward.

"If you look at the earnings for the last quarter of Nifty, the growth is 29 percent. For the full year, we are looking at an earnings number at Rs 970 on a base of Rs 820, which is a great growth again. We project Nifty earnings to grow to Rs 1,100 by next year. But a very stable government will make price outperform earnings growth," he added.

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In case NDA does not secure 300-305 seats, market participants can witness short-term lull, but it would not settle for an extreme low or catastrophic fall as was seen in 2004 or super-normal rise like in 2009, Azeez said.

So far this year, Nifty gained 1 percent, while Sensex stood flat-to-positive.

Looking at long-term perspective, Azeez remains bullish on Indian equities over the next 5 years. "If Nifty gives 8-9 percent returns, it is still above debt returns. So you can get four times the efficiency than Nifty, you can beat Nifty with half the risk of Nifty," he added.

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