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Wednesday, October 4, 2023

Stock market this week: Market experts remain bullish on India; warn of short-term volatility

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Stock market this week: The Nifty benchmark index crossed the 20,000 threshold on September 11 after nearly 52 days, sending the markets into a frenzy this week. In the days that followed, the mid and small cap area experienced a series of corrections that were rather foreseeable.

A variety of market professionals joined us throughout the week to discuss opportunities, worries, and the most important next steps for Indian investors. They also discussed why they remain “Bullish on India” but also why they think it’s time to be cautious.

Despite the fact that the fundamentals appear to be quite positive, WhiteOak’s Prashant Khemka thinks that the boost in stock prices caused by fund flows, particularly in small and mid-cap stocks, cannot continue. whenever markets reach an all-time high and continue to rise. It’s not necessary that they’ll eventually turn around and descend. However, he added, it does start out with some volatility. After five months, the 12th of September was the first day they experienced some turbulence.  More of these occurrences are likely to occur in the days ahead, according to Khemka.

Speaking about the rising interest in mid- and small-cap companies, Vijay Kedia of Kedia Securities expressed concern for new investors who might be seduced by “Bhangaar cap” or penny stocks.

Additionally, he warns investors not to lose themselves in the excitement of the Nifty hitting 20,000 and to exercise general care.

Sunil Singhania of Abakkus Asset Manager stated that he thinks India has a lot of potential with a renewed focus on growth. Regardless of any short-term gaps, Singhania also thinks that a shift will be visible with long-term foreign input into the Indian markets. “On a ‘on and off’ growth in FII flows, we cannot estimate. According to him, there will be significant FII inflows into India over the next two to three years.

According to Sandeep Tandon of Quant Mutual Fund, value equities would outperform growth companies in terms of returns in this decade. “In my opinion, this decade merits consideration as a thesis. Value equities will produce greater returns in India, and we have been predicting this since 2019,” he said.

He said this applied not just to India but to the entire world. Only growth and new-age tech companies experienced the frenzy in September 2021, when money flow into global equities reached a lifetime high, according to Tandon.

Overall, according to Nilesh Shah of Envision Capital, India is experiencing a fantastic convergence of amazing macro- and microeconomic factors that are working in harmony to favor equities investors in the long run. His long-term optimism for India is based on its comparative strength to the global macroeconomic climate. India’s “roaring success” at the G20 meeting is yet another significant advantage. However, due to factors like crude oil prices, which will continue to be a gauge to carefully follow, the market expert advises caution in the short term.

Mark Matthews of Julius Baer says that the markets will continue to rise and that he is overweight on India. Despite the existence of foreign capital, he claims that local funds will be the source of this growth. The systematic investment programs that have grown in popularity over the past few years and the number of accounts established provide a significant cushion for the market once local funds reach a certain size, which will continue as India’s per capita income increases. Growing numbers of people who are of working age and higher-paying industries like technology all have a role in this. Therefore, he continues, “local buying is a very powerful force.” Matthews uses the example of nations like Australia and Malaysia, where people begin investing money in the equity market each month as a part of their “big retirement plans,” to illustrate this point.

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