The Nifty50 has rallied more than 8 percent year-to-date in addition to around 28 percent upside in previous year driven largely by domestic money flow and June quarter earnings.
"I don't think this is optimistic scenario, it is balanced scenario and people are holding their portfolios well but the key issue we are grappling with right now is growth in US markets," Ajay Srivastava, CEO, Dimensions Consulting told CNBC-TV18.
He believes US markets are doing extremely well, economy is showing 9 percent kind of growth even though actual growth is just more than 3 percent, while Indian economy is growing 8 percent but in real case it is 2 percent.
History suggests that during global meltdown, investors prefer to go for Indian markets, but Srivastava said this is not the right time to add position here, one should diversify portfolio to US markets which is growing very fast. "We are fairly well invested in India."
He said Indian investors are heavily invested in overseas markets but in case of India, people are sticking to largecaps only. "Overall, we are still positive on export-focused stocks and largecaps."
Now the threshold is festive season, the best season of the year, he feels. He said if this festive season is good then there could be continued revival in the growth.
But if this festive season does not go well, which is indicated by stocks like Maruti, FMCG, consumer durables etc, then there is serious problem at hand. "In this case, we can definitely see 800-1,000 points correction on the Nifty by March."
He said India needs substantial measures for MSME (micro, small & medium enterprises) sector instead of five measures taken by the government last week to contain current account deficit and stem falling rupee. "In case of MSME, the government should think of reducing burden related to compliance which means ease of doing, reduce irrelevant expenditure. Overall we need export oriented package."
Stocks and Sectors
If one wants to focus on Indian markets, he believes MNC pharma is the best value sector now and oil marketing companies are cheapest in the world which at some point of time will give smart returns.
For IT sector, one should wait for a while as the index rallied 38 percent year-to-date, he said, adding in case of consumer stocks, one should hold it if has or buy it if doesn't and hold it.
On the commercial vehicle front, be selective to some extent, he advised.
Recently consumer stocks corrected after strong run, Srivastava said it is not correction, it is portfolio rejig happened. "People substantially shifted their positions to IT and Pharma stocks from FMCG but because of which I would not see derating in HUL kind of stocks."
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