Market analysts believe the year 2016 will be better than 2015 on hopes of a better-than-normal monsoon and further rate cut by the Reserve Bank of India (RBI) this year.
Ace investor Rakesh Jhunjhunwala recently said that he is bullish on the domestic equity markets. His remarks come at a time when India has replaced China as top destination for foreign direct investment by attracting $63 billion worth FDI projects in 2015. “We are in an early stage of a long-run bull market; Invest in the market and expect reasonable returns,” Jhunjhunwala said.
The BSE Sensex which started the year 2016 on bearish note surged 12.5 per cent during March 1 and April 21 this year. The index plunged 12 per cent during Jan-Feb this year. Market analysts are positive on domestic equity markets and believe the year 2016 will be better than 2015 on expectations of better-than-normal monsoon and further rate cut by the Reserve Bank of India (RBI) this year. However, some market experts believe companies with high on debt can burn your fingers in the present markets conditions.
Both, private as well as government weather forecaster predicted ‘above normal’ rains this year, which eased fears over farm and economic growth after two consecutive years of drought.
In the present market conditions, where experts are looking bullish on overall market scenario, we spoke to 5 market experts to find out which sectors an investor should avoid.
G Chokkalingam, founder, Equinomics Research & Advisory:
According to G Chokkalingam, investors can avoid all highly debt-laden infrastructure companies, some sugar companies, which have reported losses in the previous nine months. He further added that cement companies with price-to-earnings ratio of more than 15-20 multiples can be avoided.
Investors can also avoid shipping companies as global trade has not shown any uptick at all.
PSU banks whose net NPAs are 4 per cent and above with no growth in business and failed to make profits before provisions can be avoided.
Chandan Taparia, derivative and technical analyst, Anand Rathi Securities
Investors can avoid infrastructure space because the major trend in the space is negative. We do not have any buying call in this counter. Most of infra companies are facing corporate governance issues. Investors can avoid GMR Infra, IVRCL Infra and JP Infratech.
Going forward, investors can see some profit booking in cement space after the recent run up. Hence, it can be avoided.
Ashish Kapur, chief executive officer, Invest Shoppe:
Investors can avoid sectors which are linked to global economy. Sectors like steel, aluminium and oil can be avoided.
Overall markets are looking good right now. In the short run we can see some profit booking after the recent run up. It will be a better year than last year. I expect domestic benchmark indices to surge further 10 per cent this year.
Pankaj Pandey, head research, ICICI securities:
Banking, metal and oil and gas sectors can be avoided. All of these sectors are impacted by volatility in commodities. We do not see any stability in commodity prices in near-term.
Vidya Bala, head of mutual fund research, FundIndia.com:
Investors can avoid companies with high on debt and stay cautious. However, there are some opportunities across sectors at the same time.
(With agency inputs)