Ajit Mishra of Religare Broking advised maintaining a 'buy on dips' approach as every economic indicator is pointing towards recovery.
Moreover, increased support from the government and central banks globally augurs well for equity markets, he said in an interview to Moneycontrol's Sunil Shankar Matkar.
He largely expects some consolidation in the benchmark prior to the next directional move, especially after a sharp run-up in November, but ruled out major sell-off in the market, at least in the near future.
The market rally, so far, has been largely driven by overwhelming liquidity conditions, low-interest rates and reduced uncertainty in the global markets post US elections, said the Vice President of Research at Religare Broking which is a wholly-owned subsidiary of Religare Enterprises and is serving over 10 lakh clients across both offline and online platforms.
From the long-term perspective, he remains bullish on Indian markets but he feels Nifty touching 15,000 in the next one year would depend on how the COVID situation pans out ahead and measures government would undertake to expedite the growth amid uncertainty.
Q: After more than Rs 65,300 crore of FII inflow in November so far, the highest every monthly flow, do you expect the flow to slow down in coming days?
The FIIs have been pumping in money into the emerging markets ever since they got clarity over the US election outcome. This has led to strong inflows into Indian markets as well. Going ahead, the intensity of inflows in India would depend on several factors such as policy changes in the US and earnings growth in India. Having said that, we believe emerging markets like India would remain a preferred choice for FIIs.
Q: What do you expect from the overall earnings for the second half of FY21, and FY22, especially after better-than-expected September quarter earnings? Do you think 2HFY21 earnings are crucial to deciding further trend?
Given that the earnings have sprung a surprise in Q2FY21, the expectations have increased for H2FY21 as demand continues to recover.
With complete reopening on the economy and favourable news from the COVID vaccine front, participants are hopeful that these positives would reflect in the performance of the businesses also in the second half of the fiscal and any major deviation might not go well with the market.
Q: Given the spectacular run in the last eight months taking Nifty to record highs, do you expect major sell-off in coming days? Will the December be a consolidation month. And do you expect the Nifty at 15,000 and Sensex at 50,000 by next year or recent high would the top for next one year?
The rally has been largely driven by overwhelming liquidity conditions, low-interest rates and reduced uncertainty in the global markets post US elections. Besides, the successful vaccine trials amid the news of rising COVID cases have further boosted the sentiment. We do not expect any major sell-off in the market, at least in the near future. However, after a sharp run-up, we could see some consolidation in the benchmark prior to the next directional move.
From the long-term perspective, we remain bullish on Indian markets but Nifty touching 15,000 in the next one year would depend on how the COVID situation pans out ahead and measures government would undertake to expedite the growth amid uncertainty.
Q: Do you think it is still a 'buy on dips' market and why?
We do believe that it is prudent to maintain a 'buy on dips' approach as every economic indicator is pointing towards recovery. Moreover, increased support from the government and central banks globally augurs well for equity markets.
Q: Should investors continue with the same set of stocks like IT and Pharma which had a strong run in last 8 months or should one look for other sectors for investment which could give strong returns in coming year (kindly explain those sectors)?
Both IT and Pharma have seen a decent run-up and likely consolidate now. However, investors should utilise the phase as an opportunity and buy fundamentally sound stocks in a staggered manner. Besides, they may also look at buying large private sector banks with a stable balance sheet and strong asset quality as improvement in businesses and reopening of economy bodes well for their growth.
Q: Banks and NBFCs had a strong run in last few months. Do you think all concerns eased for the sector or should one wait for more data points to invest in the space?
It's been a phenomenal run in the banking and NBFC space, thanks to easing loan growth concern and more importantly receding fear of worsening NPAs situation. However, we feel all the concerns are yet not over for the sector as we are still seeing a rise in COVID cases in various parts of the country which is impacting the economic activities to some extent.
Given the current situation, we would reiterate our advice of preferring large private banks as they have a strong brand name, stable balance sheet and healthy asset quality.
Q: Do you expect a large number of IPOs in December as reports indicated that Kalyan Jewellers, Sarvoday Small Finance Bank, ESAF Small Finance Bank, Nazara Technologies, Burger King, and RailTel Corp could launch their IPOs in December?
We have observed a trend that most of the new IPOs especially post the pandemic belong to sectors that were least impacted due to the COVID situation and those who have gained during that phase i.e. digital, IT, pharma & pharmaceutical chemicals. However, with recovery in the demand and upbeat market sentiments, there could be more IPOs from other sectors as well in the coming months.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.