Rahul Sharma, Co-founder, Equity99, said that investors should avoid fresh investments in overvalued stocks. In an interview to Moneycontrol’s Kshitij Anand, Sharma said don’t let the short-term portfolio, especially the stocks that are in a loss, get converted to long-term investment.
Edited excerpts from that interview:
Q) What is your view on markets as Nifty50 climbs 16000-16100, finally! And, is the road bumpy or smooth for the index to touch 17000?
A) The market finally breached 16K mark after testing 15,900 levels several times. Further, there might be some small correction in near term, but in the long run, the market is expected to make new highs since the positive momentum continues amid positive commentary from India Inc. in Q1FY22.
Additionally, foreign investments are also expected to increase as China continues to tighten the norms, first on ed-tech & real estate stocks and now on auto chip distributors as well.
Q) What mistakes should one avoid as market trades near record highs?
A) 1. Do not invest fresh in overvalued stocks, valuation becomes very important when you aiming for investment.
2. Short-term trades should always have a strict stop loss and one must respect that.
3. Do not convert your short-term portfolio, especially which are in loss, to long-term investment as this will not help in creating wealth.
4. Do not invest without checking the fundamentals of the company, especially for the long term.
Q) Nifty hit 15000 for the first time on Feb 5, and since then it has been moving steadily. After hitting 16000 which took 5-6 months - do you think we have hit a top?
A) India is in a growth mode with developments in Infrastructures & supporting government initiatives. So considering the developed markets are expected to continue making new highs.
Q) What is your call on small & midcaps which also hit fresh record highs today, but have outperformed benchmark indices on a YTD basis? Time to be selective in this space? What are your views?
A) Nifty Midcap index has recently made a high of 28336.65 gaining nearly 35.38% YTD. The midcap index has been making higher highs driven by CAPEX plans and Debt reduction drive. Further pharma, banks and auto sectors are expected to perform well in this space.
Q) Any stocks which are looking good on a fundamental basis that investors can buy at current levels and why?
A) Our top picks are Tech Mahindra: Target Rs 1500
The stock is looking explosive on charts. It recently posted super Q1FY22 results. In June Qtr DII`s have increased their stakes from 14.39% to 16.50%. The stock is expected to reach target levels of 1500 with a Stop loss of 1150-1100.
ICICI Bank: Target Rs 900
The private sector lender has declared superb results with NII surging 18% YoY and NIM at 3.89%. Also, despite the pandemic, the company`s asset quality has not been impacted much with Gross NPA at 5.15% & Net NPA at 1.16%. We expect the stock to reach 900 levels with a Stop loss of 770.
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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