Indian share markets have recovered from every fall and made new highs after the Covid crash which has brought some complacency among both local and foreign investors. Now, investors are worried about selling aggressively even in the face of apparent negatives as they are afraid of losing the next upside. Nifty is likely to hit a new high soon, said Deepak Jasani, Head of Retail Research, HDFC Securities in an interview with Harshita Tyagi of FinancialExpress.com. BFSI, Pharma, Capital Goods, and PSU stocks look good to accumulate on dips, while Metals, Oil & Gas may be avoided for a few more quarters, he added.
Amid geopolitical tension, hot inflation, interest hikes, and recession fears. Indian markets have relatively outperformed. Will this outperformance continue going forward?
The near-term macro situation in India is better than a lot of other markets. Also, India scores better against most other emerging markets and could keep attracting funds from FPIs. China has its own set of problems currently. All these could mean that the outperformance of India could continue for some more time; however, the degree of outperformance may reduce due to apparent overvaluation concerns held by some investors.
IMF, World Bank, Moody’s have given recession warnings. However, they have stated that India remains better placed. Do you agree with that assessment as well?
While India’s macros are better managed than a lot of other economies, India cannot remain totally insulated from the world. India’s problems of high trade and current account deficits, Rupee depreciation, fiscal concerns, high inflation and interest rates, and forthcoming elections (May 2024) could weigh on the minds of some investors. Some or more of these concern areas could actually play out against India in the future.
India’s inflation is still above RBI’s threshold, trade deficit, CAD data is concerning. Amid rate hikes, while FIIs pulled out money, DIIs remained invested, why?
The fact that our markets have recovered from every fall and made new highs after the Covid crash has brought some amount of complacency among investors – both local and foreign. Investors are worried of selling aggressively even in the face of apparent negatives – whether local or global as they are afraid of losing out on the next upside. Our markets are valued highly going by global and our own past valuations. Despite this, investors feel that India as a market may continue to outperform for quite some time. The recent rise in debt yields has not dampened the lure for equity in any significant manner.
Indian benchmark indices are very close to hitting their all-time highs. When do you see Nifty reclaiming those levels? Is it the right time to enter markets or should one wait for a correction?
Like BSE Sensex, Nifty could hit a fresh high soon. Investors will do well to check their asset allocation and ensure that due to the rise in equities over the past two years, their equity allocation has not gone overboard. For investors who are under-invested in equities, any time is good enough to top up, although a staggered buying would be advisable for them. They may also review their equity portfolios and take some profits out of stocks that have outperformed very well over the past two years and raise some cash for deployment after a decent correction. Similarly, they can look to exit stocks (irrespective of profit or loss) that have not performed in these good times after checking the reasons for the underperformance.
What sectors or stocks should investors look at or avoid from a short-term investment perspective?
BFSI (credit cycle now recovering and asset quality under check), Pharma (worst of export performance seems behind and domestic growth remains robust), Capital Goods (Govt Capex has kicked off, private sector to follow suit even as capacity utilisation remains high), PSU (focus on improvement in business parameters and robust order flows) look good to accumulate on dips. Metals, Oil & Gas may be avoided for a few more quarters.
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