One need not fear red, as it stands for both danger and life. So, a major correction in markets, viewed as a danger by many, should also be seen as an opportunity for the smart money, says Singh.
One need not fear red, as it stands for both danger and life. So, a major correction in markets, viewed as a danger by many, should also be seen as an opportunity for smart money, Amar Deo Singh, Head Advisory, Angel Broking Ltd, said in an interview to Moneycontrol’s Kshitij Anand.
Edited excerpts:Q) D-Street is in deep red this Holi. How can investors add more colour to their portfolio?
A) The market has been coloured in the red this Holi. However, one need not fear red, as it stands both for danger and for life. So, a major correction in markets, as viewed as a danger by many, but also viewed as an opportunity for the smart money.
However, just as one shouldn’t try to catch a falling knife all at once, similarly, let the markets settle down before buying value. It is in such times that the courageous step in, but at the same time not all buying needs to happen all at once.
It should be a gradual process, as investing is all about staying invested in turbulent times, at the same time, picking up value stocks on the cheap.Q) Any top three-five stocks from a fundamental or technical perspective that could be good buys from a long-term perspective?
A) Amongst the stocks that we recommend from a long-term perspective, few of them include RBL Bank, currently trading at 1.6x its FY2021E book value per share, which we believe is reasonable for a bank in a high-growth phase with improving retail loan mix and building strong retail liability franchise.
Next, one can look at Safari Industries, where we expect its revenue to grow by a CAGR of ~21%/~30% in revenue/earnings over FY2019-22E on the back of growth in its recently introduced new products.And lastly, one can look at UltraTech Cement, where we are positive on the long-term prospects of the company, given the ramp-up from acquired capacities, pricing discipline in the industry and benign energy and freight costs.
Q) The fall in crude oil prices is good for the Indian economy but not as much for the markets. What does the history say about equity markets and fall in crude prices?
A) Overall, a fall in crude oil prices is good for the Indian economy as well as for the market, but it is the quantum of fall and the reasons behind the same which are more important.
Whenever, historically, crude prices have fallen significantly on the back of a demand slump, it has never been good for the markets as well as that points towards a slowdown in the global economy.
Further, whenever there has been a sudden fall in crude oil prices because of reasons such as terror attack, geo-political tensions or for that matter, the now coronavirus factor, equity markets also tend to witness a sell-off, though the magnitude and duration of the fall varies.Being primarily a crude oil dependent importing nation, India stands to gain significant in terms of dollar savings in excess of $20 billion in FY21, were crude oil prices to sustain below the $50-mark. However, how we capitalise on this as a nation is to be seen.
Q) India Gold touched fresh record highs on Monday following fall in crude oil and coronavirus impact. What is the way ahead for the yellow metal? Do you think it will outperform equities for the second year in a row?
A) The yellow metal has been on a roll since last year and this year, too, so far it’s up by almost 13 percent in rupee terms, while up by almost 10 percent in the dollar terms to trade around the $1,670-$1,690 zone.
Gold is considered as a safe-haven asset and in such times of uncertainty as the present, it stands to gain as investors rush towards such asset class.
The global economy definitely seems to have become impacted by the influence of the coronavirus, so that will play on the equity markets, hence benefitting gold in turn.
Q) The Sensex and the Nifty dropped to a fresh 52-week low on March 9. In January, they had hit a record high and the tables have turned. Can we say that we are firmly in a bearish grip or in a downtrend? What are the important levels to watch?
A) Major indices have hit a 52-week low, so that definitely rings a bell. Technically speaking, the short-term and intermediate-term technical indicators have turned negative, however, the long-term charts point towards a major support zone around the 10,000-10,200 mark.
One needs to definitely trade or invest with caution as the uncertainty still looms large. However, it could be a good buying opportunity, with valuations becoming more attractive.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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