It is better to bet on stocks than markets, and there will be numerous stocks in the mid and small-cap universe that can double from here, Satish Kumar, Head of Equities, Equirus Securities, tells Moneycontrol’s Kshitij Anand in an interview. Edited excerpts:
Q) The International Monetary Fund’s global outlook was worrying but it looks like the worst has been factored in. What will cap the upside for Indian markets?
A) The market tracks the economy in the long term, i.e. 10-15 years. In the short term, it can remain independent. While GDP and earnings are important; liquidity, risk-taking, and global interest rates are also important factors.
It is true that the IMF has forecast some negative GDP growth number but that’s history. The market is already past FY21 and looking at FY22.
I do not know the extent of earnings decline this year and I would not hazard a guess. I have always maintained that it is better to take a call on stocks rather than broader markets. Keeping that view, it would not be fair to try to predict market levels.
Q) How will you describe the remaining six months of 2020 in one word and why?
A) Recovery! Worst of COVID-19 (rather the fear of COVID-19) is behind us. While I am no expert in virology, common sense says that fear of the virus is much more virulent than the virus itself. Right now, people are taking all precautions but I feel the mortal fear is subsiding.
Q) Where do you see markets and earnings over the next six months?
A) Stagnancy! Maybe the market can go 5-7 percent up or down but the main action will be in stocks. There will be numerous stocks in the mid and small-cap universe which can double from here.
Q) In the first six months of 2020 we saw plenty of buybacks and companies opting for delisting. What is the rationale behind these moves and will the trend continue through the year?
A) Maybe promoters think that the market is not doing justice to their company. Loads of easy money is out there so more buy-backs, delisting could happen.
Q) Which sectors are likely to be the leaders and the laggards in the remaining year?
A) Pharma, consumer, cement/ cement products are likely to be leaders. Banks can be market performers or even outperformers. I think retail and malls will continue to struggle.
Q) Many new investors joined the party on D-Street in the first six months of 2020 to begin their journey towards becoming millionaires. What are the survival tips you will share with them to keep them afloat amid volatility?
A) Patience. Loads of patience. Keep one answer clear in your mind “whether you will buy or sell if your holding stock falls by 20 percent”.
Q) Gold hit a record high in the week gone by. Do you think it can again outperform equities in 2020? What is your outlook on the yellow metal?
A) Definitely yes! Gold will outperform for sure in 2020. It is not that US dollar will collapse but fear and risk of that 6 sigma event will get priced in the yellow metal.
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.
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