Even as we come to the end of FY18, which saw the Sesnex closing at above 33,000 and the broader Nifty holding on to 10,200 mark, Jinesh Gopani of Axis mutual fund says the markets may remain range-bound in the coming months. In an interview to FE Online, Jinesh Gopani said that the stock markets will be impacted by the upcoming crucial state elections in the second half of the year, even as it faces headwinds of rising global risk free rate, and global crude oil prices. “The stock markets are looking for various triggers for correction, the rising fiscal deficit, the recent global rout, US 10-year G-secs at near all-time high levels are few factors to watch out for,” he said.
According to the expert, companies with good earnings growth are slated to do well. Sharing sectors which show such potential, Jinesh Gopani noted that select NBFCs, retail-oriented private sector banks, auto companies and rural sector stocks have shown a good rebound, and have earnings growth potential. Gopani observes that the recent earnings reported by IT companies provide confidence.
Taking stock of burgeoning inflows in the mutual funds in recent times, Jinesh Gopani said that due to demonetisation, around Rs 16 lakh crore worth of investment has flown into the capital markets (including mutual funds, ULIPs and stocks). He notes that this has happened as investors realized the importance of investing into financial assets as opposed to gold and real-estate. Addressing a question on domestic inflows versus foreign inflows, and why foreign inflows have remained tepid while domestic inflows remain robust, Jinesh Gopani pointed out that India is not the only option for foreign investors. “From a valuation point of view, China looks better,” he said.
The domestic stock markets closed in the red in the last trading session in FY18. Notably, FY18 was marked by a Sensex surge till January 2018 which saw the the 30-share index zooming from 29,000 to a peak of 36,000. In the same period, the broader Nifty 50 topped the five-digit mark of 10,000 for the first time ever. In FY18, the Nifty index scaled to a all-time high of 11,171.55 before settling below 10,200-mark yesterday.