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Weekly Dossier | Ajay Srivastava, Sunil Subramaniam, James Sullivan and others on market, pockets of opportunities; and more

Market experts do not find Friday's fall in the market surprising. Some of them believe the correction in the market was overdue as the market traded at higher valuations and most of the positives were already factored in.

February 27, 2021 / 11:03 AM IST

Indian market ended the week gone by on a negative note. The equity barometer Sensex closed below its crucial support placed at 50,000 while the Nifty50 also ended below 14,600 levels. However, the broader market outperformed.

The S&P BSE Sensex fell 3.5 percent while the Nifty50 was down 3.02 percent for the week ended February 26. In comparison, the S&P BSE Midcap index fell 0.28 percent, while the S&P BSE Smallcap index closed with gains of 1.4 percent during the same period.

Market experts do not find Friday's fall in the market surprising. Some of them believe the correction in the market was overdue as the market traded at higher valuations and most of the positives were already factored in.

Arvind Sanger, Managing Partner of Geosphere Capital told CNBC-TV18 that the correction was overdue in the market and the market discounted higher earnings already.

"10 percent correction is very healthy and normal in a bull market. There is time to look at new emerging leaders in the market," said Sanger.

Here is what experts have to say on markets and areas of opportunities:

Ajay Srivastava, CEO at Dimensions Corporate Finance Services (to CNBC-TV18)

If you really want to bet on the economy stocks, I think you need to start and continue with metal stories rather than going elsewhere in the cyclicals.

Another segment is home decor, I think that is where the big story is coming up. You got to be there whether it is your tile manufacturer, whether it is a paint manufacturer, anything related to real estate inputs that are part of the course in this market.

The market is giving you more and more opportunities to buy into the stocks you wanted and this is the time to buy, not to sell and certainly not to short.

Aditya Narain, Head - Institutional Equities Research, Edelweiss Securities (to CNBC-TV18)

This has been a very strong earnings season and it has been accompanied by upgrades. At the aggregate, we have seen an upgrade of about 4-5 percent.

Our sense is we will continue to see this kind of momentum and we are looking at a 25 percent earnings growth over the next two years.

From a theme perspective, the more medium-term themes would be the IT space. Also, banks as we believe you will start seeing a certain amount of lending.

You should also start seeing the industrials do well given as we think capex is going to start coming through. So these are underlying themes that will sustain for a longer period of time.

Sunil Subramaniam, MD & CEO, Sundaram Mutual Fund (to CNBC-TV18)

I believe that the Budget was not just about action, it was about direction. South Korea is the only country that is going to get back to pre-COVID absolute GDP levels faster than India.

So capital goods supply, building materials - cement, steel, paints, and the likes and those would be the bets because those order books are not yet showing. Hence, buying before that - if you do a lot of research to see who is likely to back those orders because when the news comes the price jumps. So we have to catch it before the news.

Jitendra Gohil, Head of India Equity Research at Credit Suisse Wealth Management (to CNBC-TV18)

We have a positive view on the banking sector and the large private banks. I think the banking sector will see kind of a nice cyclical recovery.

The loan growth is still in the mid-single-digit and I think as we grow our economy, the loan growth will pick-up substantially from here onwards and we expect that growth to be at least in higher single to low double-digit on a sustainable basis. So we remain very positive on private sector banks as well as the corporate sector banks.

We do believe that this recovery is a cyclically driven recovery. Infrastructure-driven development is happening at a faster pace, the government is going to spend on infrastructure and that is one of the key reasons that the demand domestically is going to be strong for steel companies. In cement as well, the demand momentum is picking up.

James Sullivan, MD-Asia Equity Research, JP Morgan (to CNBC-TV18)

We are focussed on interest rate sensitives like banks and autos in India. We expect earnings upgrade breadth to narrow. We are not focussed on valuations in India.

We do not expect any significant economic impact due to the second COVID-19 wave.

Historical analysis shows no relation between higher bond yields and equity valuations.

Laurence Balanco, CLSA told CNBC-TV18 (to CNBC-TV18)

The 50-day moving average at 14,300 is the support for Nifty, below which Nifty may find support at 13,500 which is the January low. The deepest correction would be a move back to the late January low at 13,500 for Nifty.

The key point I would make though- it is a correction rather than a major reversal in equity markets and that is why I still think pulling back towards 13,800-13,500 on Nifty will still be a buying opportunity and that longer-term trend should remain intact.

The rate of change in bond yield is more important than the level and if yields reach the level of 1.9 percent (in the US), it will put more pressure on the equity market.

If the rate of change on yields starts to decelerate, the equity market should be able to digest that and continue the uptrend.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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first published: Feb 27, 2021 10:57 am