Dalal Street Voice: Though valuations remain expensive, new age businesses good for long term: Ajit Mishra of Religare Broking

Most of these new-age businesses look good for the long term however valuations are certainly on the expensive side, Ajit Mishra, VP - Research, Religare Broking Ltd – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts:  

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Q) How do you describe the market action in November? We have seen some volatile moves in the market that pushed bulls on the backfoot?

A) Global markets largely dictated the trend last week while cues remained mixed on the domestic front. The beginning was upbeat, tracking firm global indices however profit-taking in the middle pushed the bulls slightly on the back foot.

The rebound seen on Friday again changed the tone and helped the index to close around the week’s high. Consequently, Nifty closed above 18,100 levels.

Q) Where do you see Nifty50 in the near term?

A) The Nifty should hold above 18,100 to inch towards 18,350+ zone and the support has now shifted to 18,000-17,850 zone.

The week is a truncated one with equity markets remaining closed on 19 November (Friday) and there is no major event lined up. With the result season almost behind us, focus will shift back to the global markets for cues. Traction in primary markets will keep investors busy.

Q) Mid and Smallcap outperformed marginally. Are the large-caps getting punished by FIIs or is it the valuation quotient?

A) It could be partly both as FIIs have significant exposure in the large caps and their continuous outflow has resulted in the recent pressure. Also, the decent results from select midcaps have led to higher investors’ interest.

Q) FIIs have pulled out more than Rs 4500 cr from the cash segment of the Indian equity market in November. Do you think this volatility is because of expectations of a sooner than expected rate hike from Fed? Will large caps be under pressure?

A) The news of US inflation hitting a 30-year high has certainly spooked markets the world over and participants are concerned over the possibility of a sooner than expected rate hike. However, increased domestic participation is providing some respite in between.

We feel it’s prudent to focus on sectors/themes which are fundamentally sound and attract buying interest on dips irrespective of their market cap.

Q) Banking and Realty stocks took a knock in the week gone by. What led to the price action and what should investors do in the coming week?

A) After a strong run, some profit-taking was expected in the realty and banking space. Also, risk-off sentiments globally have added to the woes.

We expect the realty pack to do well after the marginal pause while indications are mixed from the banking pack. Investors shouldn’t read much into the recent fluctuations and continue with quality stocks with the long term view.

Q) There are plenty of IPOs which got listed in 2021. Any new-age business which investors can look at for long term?

A) Most of these new-age businesses look good for the long term however valuations are certainly on the expensive side.

In our opinion, investors should diversify their investment in these companies instead of focusing on any particular business.

Also, they should plan in a SIP way of investing instead of lumpsum citing the valuation concerns.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)