Weekly Dossier | Top experts on market, cryptocurrency and picking midcaps

The long-term view of the market is positive but the rising bond yield is a matter of concern and should be watched closely, say experts.

February 20, 2021 / 10:05 AM IST

The Indian market seems to be in a consolidation mode, with the equity benchmarks Sensex and Nifty50 losing more than a percent in the week ended February 19.

Broader markets outperformed the benchmarks in a week that started strong but closed lower. The BSE midcap index and smallcap index gained 0.63 percent and 1.23 percent, respectively, for the week.

The long-term view of the market is positive but the rising bond yield is a matter of concern. Here is what experts have to say on markets, areas of opportunities and cryptocurrencies:

Andrew Holland, CEO of Avendus Capital Alternate Strategies (to CNBC-TV18)

The bond yields are telling us something and the alarm bells are ringing.

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In the US, the growth stocks are taking it on the chin as yields go higher. Bellwether stock like Tesla is down 10-12 percent, so far, this year.

So, if you get that kind of fall from growth stocks globally, then it will affect the Indian markets and you could see a very quick kind of a move to risk-off trade.

I expect a 5-10 percent kind of a fall, as markets digest where interest rates are really going.

The central banks will keep rates lower for longer but markets will start to work out when they are going to increase rates and that is why you are seeing these falls in the market globally.

Rohit Shrivastava, Founder & Strategist at Indiacharts.com (to CNBC-TV18)

The focus has to be stock-specific. Even when the correction started, we saw the metals and PSU stocks do well and those two sectors will remain on fire because both of them are showing very strong trends.

So, every time you see a decline in those sectors, you will see buying come in again and again.

Basant Maheshwari, Portfolio Manager at Basant Maheshwari Wealth Advisors LLP (to CNBC-TV18)

If you are playing for an economic cycle, you buy what I call the "dirty mid-caps", where the company is not the most efficient.

For example, if you are buying a steel company and steel is coming out of a downcycle into an upcycle, the best and the most efficient producer won't give you the maximum returns. The maximum returns will be made from the companies that are reporting EBITDA losses and would, after the recovery starts, convert those losses into profits.

Your entry has to be right and your exit has to be right.

Kenneth Rogoff, former Chief Economist at IMF (to CNBC-TV18)

If there is no final use case for bitcoin, ultimately the bubble will pop. Every central bank is looking at bitcoin and deciding what to do.

The issue with bitcoin is that there is no final use case. Bitcoin is an asset class in a way modern art is. I don't think regulating bitcoin is difficult.

If Tesla wants to sell cars for bitcoins, it will still have to fulfill KYC obligations. Rules that apply to money laundering will have to apply to cryptocurrencies.

We are looking at an unreal economy with interest rates so low. Markets will begin to decline when interest rates begin to rise.

Hugh Young, MD at Aberdeen Asset Management Asia (to CNBC-TV18)

The stock prices have run extremely hard and fast. Caution remains on the valuations. China has been the runaway market but it still has a lot to go. India has also had a very strong run. It is hard to choose between China and India.

Fundamental issues between the US and China remain, they will not go away. The biggest risk is on the interest rate front. If money becomes tight that will be a big risk.

Bitcoin is an opportunity for those at the edge of investment. Don't see much of a risk to the markets from bitcoin.

Bitcoin is an example of excesses like the flood of IPOs.

Disclaimer: The report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Feb 20, 2021 10:05 am

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