Sep 18, 2017 11:21 AM IST | Source: CNBC-TV18

As market hits record highs, Sunil Singhania believes it still has a long way to go

Says economy will continue to grow and that will drive up the equity markets going forward.

The Nifty began the week on a strong note, clocking fresh record high in the opening tick along with the midcap index as well. The Sensex, meanwhile, was just a few hundred points away from its fresh milestone as well.

In such a time, how should an investor approach the market? Should one continue to build the portfolio or take a step back and enjoy this rally?

Sunil Singhania, Global Head – Equities, Reliance Capital said that there is still a long way to go. “We are in a structural situation, the economy will continue to grow. There could be a few bumps, but the economy is the barometer for equities…as they grow, the equity markets will also grow,” he told CNBC-TV18 in an interview.

Having said that, the economy has been struggling a bit, he said, adding that it could be due to reforms such as demonetisation and GST. Against this, the market has run up a bit, but we have to start seeing growth from corporates, he added. He justifies his positive stance on equities stating that such investors always believe in optimism in the future.

For mutual fund investors, Singhania recommends investing in a large-cap fund if the investment horizon is less than 3-5 years. If one can hold investments beyond that, there are plenty small and medium companies, which will grow faster than largecaps in this duration.

Speaking on sectors, Singhania said that NBFCs were overvalued, but we also have to see how much these are discounting the future growth. Among them, there are housing finance companies as well, which are performing well too. One has to pick and choose in this space, he told the channel.

On oil and gas, he highlighted the government’s pragmatic approach on process and outlook for the sector. “Over-profiteering is something that they don’t like and the industry and government have come to a consensus,” he added.

In terms of infrastructure, he said that large projects are being announced by the government. “Soon, large capex plans will see the light of the day and the government has realised that for this to start, the capex has to be led by government-led activities,” he told the channel. Among them, cement stocks could be an indirect play.

Meanwhile, pharmaceutical space has been challenging in the past few years. But, if the stock selection is right and wait for a bad day, the sector could give you good returns, he said.

The primary market has been buzzing lately, with several companies raising money through IPOs. The oversubscription trends have also been worrying, to which he said that the movement is due to HNIs doing a leveraged application. They are doing it with the intention to flip it on day one. Plus, the lure of making big money through them is pushing up subscriptions as well.
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