Indian equity markets may witness small corrections in the near term; however, the bounceback will be sharp led by recovery in the domestic cycle and corporate earnings. Technical analysis suggests that Nifty may reclaim 17,800 in one year, while Sensex is likely to top 59,000, said Mohit Nigam, Head – PMS, Hem Securities in an interview with Harshita Tyagi of FinancialExpress.com. IT, infrastructure, capital Goods, EV and manufacturing stocks are good bets from a long term investment perspective. Investors can accumulate fundamentally strong largecaps in a staggered manner at good discounted prices, Nigam added. Here are the edited excerpts from the interview.
Markets have corrected over 2% this week. Will we see a bounceback or is further correction likely? What are your targets for Nifty and Sensex for the next one year?
Indian markets have corrected around 10% in the last one month mainly due to rising global yields to counter inflation. Surprise hike by the RBI also contributed to this recent correction. Some small corrections further can’t be ruled out and volatility may remain at elevated levels due to tightening liquidity and earning season. But we believe the bounce back will be sharp and come soon led by recovery in the domestic cycle and corporate earnings.
All of the major business houses are optimistic and planning for future growth. We feel that markets are oversold here and we may witness a bounce back soon. Largecaps are looking attractive valuation wise and there are a lot of names in IT, banking and auto space which investors can accumulate in a staggered manner. Our top picks are Tata Motors, Mindtree, Bajaj Finance and L&T.
Nifty 50: 17600-17800
Where is Nifty headed in the near-term and what are the crucial support, immediate resistance levels?
The benchmark Nifty 50 is trading around its crucial levels of 15700-15800. We believe the index can bounce back from these levels and if somehow it breaks these levels, the next immediate range will be 15000-15200. The immediate resistance for Nifty is 16200-16500.
Buy the dip or sit on cash for further correction – what should investors do?
Short-term movements in the markets could be volatile but we believe that all Indian fundamentals in the long term are very bullish and due to this uncertainty, the Indian economy will have no long-term impact. Most of the variables which we watch out for India continue to work in favour of the country and we do not see any major dent in the economic recovery whether it is this year or in the next few years. Currently, we should wait and watch the situation and gradually accumulate fundamentally strong scrips which we are getting at good discounted prices.
What are the key stocks, sectors that investors can look at?
Investors are currently seeing the market in a very dicey mode. But despite short term challenges, we believe that going forward, the market will stabilize and will resume its upward movement. Some sectors which may outperform the market in terms of returns are defence, EV, IT and Infra. We believe that the momentum is going to be very strong in these sectors in the coming few years. All these themes that we uncover share one common factor that is their exponential growth potential. Most of the above mentioned sectors are ready to redeploy the cash flow back into business as everyone is looking for growth.
PLI scheme and Make In India initiative by the government will give a push to the EV sector. India’s electric vehicle (EV) market is expected to grow at a compounded annual growth rate (CAGR) of 90 per cent in this decade to touch $150 billion by 2030 The Indian EV market is currently in its initial phase and is estimated to grow at a CAGR of 90% from 2021 to 2030. In terms of penetration, EV sales accounts for barely 1.3 per cent of total vehicle sales in India during 20-21. However, the market is growing rapidly and is expected to be worth more.
Indian defence market is at the cusp of revolution, with the introduction of government policies like Aatmanirbhar Bharat, Make in India and introduction of private players to speed up defence production and increase export by 5 times. India aims to increase production output to $25 billion in coming years which makes defence an attractive sector in park investor’s funds.
New age IT sector continues to be a strong and growing sector. Economics, jobs and personal lives are becoming more automated which becomes the direct growth factor of the technology industry in coming years.
DISCLAIMER: Stocks mentioned in above answers can be part of HEM Securities PMS Fund. Hem Securities Ltd, its Associates, PMS, their Directors, employees, and their relatives may from time to time, have long/short position and may buy or sell the securities of the above mentioned company(ies).
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