Thanksgiving Day has started on a positive note for the Indian markets. The Nifty and the Sensex scaled fresh all-time highs in morning trade. Though the indices have come off the morning levels, the biggest concern was the cautious stance across the small and midcaps. They have been in negative territory.
The markets had been consolidating for 14 months before they hit fresh highs, but what’s the outlook going forward? Is it the beginning of a fresh bull run or just a blip? FinancialExpress.com spoke to a host of market gurus on what they made of these levels and the expectations going forward.
1. Ramesh Damani: ‘A new dawn for markets’
Veteran investor and leading market guru Ramesh Damani cheered the new highs that the indices hit. According to him, “In new surroundings, one grows new eyes. By making a new life-time high, the indices force us to acknowledge a new dawn. Onward and Upward.”
2. Nilesh Shah: Investors must maintain asset allocation
Nilesh Shah, MD Kotak Mahindra AMC highlighted the need for investors to maintain asset allocation amid the current optimism. “The street is sensing a reduction in the intensity of FPI selling, a higher possibility of double-digit earnings growth from the December quarter and a slew of reforms from the government to push growth into higher orbit. This optimism is overpowering relentless promoter selling. Markets are at an all-time high due to this optimism. Investors must maintain their asset allocation at an all-time high market,” he added.
3. Vijay Kedia: Small and midcaps under pressure
Leading market veteran Vijay Kedia pointed out that “all-time high is meaningless, especially when the majority of the investors who invest in midcaps and small caps are down by 30 -50%. However, this is a common phenomenon and history repeats itself.”
4. Manish Sonthalia: Rally very narrow
Manish Sonthalia, Director and CIO of Emkay Investment Managers also reiterated concerns about the small and midcaps, “Markets really do not feel like they are at all-time highs, with the Midcap Index and Small Cap Index still some distance away from their respective highs. The last 10% on the Nifty has been majorly led by only 12 stocks, creating a very narrow rally which is not representative of the overall optical optimism created by the headline Nifty crossing the previous high of 26,277.
5. Ajay Bagga: Where are the markets headed next?
Market veteran Ajay Bagga too raised concerns about the quality of the current rally. According to him, “It is not a time to celebrate, as markets have reached back to a record level that they made in September 2024. The bigger questions to ask are: 1. Why did the market languish for 14 months and 2. What now from here . Indian markets were at a relatively high premium valuation vis-a-vis DMs and EMs in September 2024. That could be justified if India continued its economic momentum and corporate earnings growth at high double digits. What happened instead was a slowdown in the economy and corporate earnings growth languishing.”
He highlighted that the high valuations, stalling growth and earnings, lack of AI pure plays and promoters cashing out all contributed to the 14 months of consolidation in the Indian markets.According to him, “the outlook is certainly better, as fiscal and monetary stimulus is in place, aggregate demand is recovering, and consumption is getting a fillip from the GST cuts.”
He added that, “historically, these downturns last around 10 months on a median basis in the Indian markets. This time the 14-month period is slightly longer in duration, though in amplitude we saw very steady markets and not sharply falling markets.”
Overall, the markets are right now in an interesting juncture with the earnings showing some signs of pick-up going forward. With the Q2 GDP numbers likely to be announced on November 28 and the RBI’s rate decision next week, investors will watch out for the next big trigger for the markets.