Manish Jain, Head of Fund Management (PMS & Equity Advisory), Centrum, said the next trigger will most the pickup in mass market consumption, which has been under stress. “The festive season in FY25 is something to watch out for," he said.
The Union Budget to be tabled in June-July and the much-awaited interest rate cuts are the other two triggers that can take the Nifty higher, Jain, who has over 20 years of experience, said.
In an interview to Moneycontrol, Jain said IT services’ adverse earnings cycle had bottomed out and stocks were reasonable priced, offering good long-term investment opportunity. Edited excerpts:
What will be the triggers for the next leg of Nifty rally towards 25,000?
The markets seem to be now getting into a consolidation phase with the Nifty exhibiting sideways movement. This typically tends to happen when it’s waiting for the next trigger. We believe that while fundamentals of the economy remain strong, we are in a fair value zone in largecaps and overvalued in midcaps.
The next trigger for the market will most likely be a material pickup in mass market consumption which has been under stress off late. The festive season in FY25 is something to watch out for.
Another key trigger for the markets would be the Union Budget in June-July where some policy initiatives and tax changes are expected to be unveiled. Lastly, markets are waiting with bated breath for the FED and RBI to initiate rate cuts.
Also read: FY24 GDP growth could be 'very close' to 8%, says RBI Governor Das
What is your preference in the financial space — PSUs over private or private over PSUs and why?
The near-term outlook for the financial space looks a little weak. With deposit mobilisation being a concern, NIMs (net interest margin) expected to remain soft and unsecured credit growth casting a potential shadow on asset quality, we do not expect this space to be a massive outperformer in the near term.
Hence, we advise investors to cut weight in the space and look at alternate sectors which have a more favourable risk-reward ratio.
However, some largecap banks have been underperformers in the last few months and are available at mouth-watering valuations and they can be looked at as either defensive bets or long-term investment play.
Most experts are excited about the power space. What do you think?
India’s energy space has been on fire since the post-covid days and continues to evolve at a rapid pace. We continue to remain constructive in the space and believe it’s a good long-term bet.
Which are the dark horses for FY25?
We are now starting to get bullish on two sectors: a) IT services, which we believe are witnessing a bottoming out of the earnings cycle and have reasonable valuations, and b) auto which still seems to have a strong leg room for growth.
Have you changed your strategy after recent AMFI circular suggested lowering inflows into small, midcap funds?
No. Our strategy has been guided by a more bottom-up analysis rather than a top-down approach and we believe that pockets of value still continue to exist.
Also read: PNGRB advocating reasonable returns for CGD cos, concerned over extra profits
Do you expect agencies to revise FY25 GDP growth estimates upward, especially after reading recent GDP numbers?
We believe that all the fundamental reforms that the government has undertaken in the last few years are now starting to show an impact on India’s GDP growth. We do think that India has the strength to sustain a 6 percent+ sustainable GDP growth for a medium term perspective and will likely remain the fastest growing economy in the world.
Disclaimer: The views and investment tips expressed by investment 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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