Dalal Street Voice: Value buying opportunities in select auto, banks & PSU stocks, says Amit Jain of Ashika Group

Amit Jain, Chief Strategist - Global Asset Class, Ashika Group, says that they see some value buying opportunities in selected automobile, banks & PSU stocks presently.

Jain has over 18 years of extensive experience in the Indian banking & financial services industry. Prior to joining Ashika Group, he worked as a country head of Reliance Capital Group Company.

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In an interview to Zeebiz's Kshitij Anand, Jain said that we are a perpetual bull in Indian Market for this ongoing decade of 2030, and even if we see some correction or crash in Global Markets due to some reasons, even then we believe Indian Market shall be the first one to have a V-shaped recovery.

Edited Excerpts -

Q) When do you see a rate hike by the US Fed?

A) Given the overall macroeconomic outlook of the US, there are higher chances that the US Federal Reserve will reduce the $120 billion monthly bond purchasing program from November 2021.

However, chances of a hike in the rate of interest at least till April 2022 seem little. This probable reversal may create some technical pullback in Global Markets.

This move may further strengthen the US dollar index and put some checkpoints for the ongoing commodity bull market.

Q) What are your views on the Evergrande crisis and its potential impact on the Indian market?

A) In my view, this will have a limited impact on the Indian economy, and the stock market. In the short term, we may see some panic reactions by Global Investors, which may impact the Indian Market but in long run, it will further benefit India, as the world will continue to follow China+1 policy keeping the longer horizon in mind.

Q) What is the investment strategy of your fund in picking winners?

A) As of now, NIFTY@18000, we see very limited opportunity in the broader market, hence it is advisable to have a value investing approach keeping the long-term view in mind.

Also, at this moment, investors should avert leveraged positions if any. We see some value buying opportunities in selected automobiles, banks & PSU stocks at this moment in time.

Q) How are FIIs looking at India? They have turned net buyers after 5 consecutive months of being net sellers at least in the cash segment of the Indian equity markets?

A) Yes, after March 2021, we are seeing some positive numbers from FII’s in this month at least in the cash market.

If you closely observe FII’s have largely missed Indian market opportunities since March 2020. Most of the NIFTY rally from 7500 to 18000 is driven by domestic Institutions, HNI’s & retail Investors.

FII's had only participated broadly from a NIFTY range of 11500 to 14500, which shows that now India Markets has enough depth where it can survive & even grow without FII's flow as well.

Q) What is your call on markets for the next 6-12 months? Nifty eyes 18,000 while the S&P BSE Sensex is on course to hit 60000?

A) My view on the Indian market is very positive, however, a short correction in India’s bull market cannot be ruled out at this level when markets are trading near a lifetime high.

We are a perpetual bull in Indian Market for this ongoing decade of 2030. Even if we see some correction or crash in global markets due to some reasons, even then we believe Indian market shall be the first one to have a V-shaped recovery.

Q) The market is rising on the backdrop of expensive valuations when compared to history? How does the number stack up for Nifty as well as for mid and small-cap indices?

A) Yes, Indian markets are trading at a much higher premium compared to their historic valuation matrix, but it is true not only for the Indian market but for all Global Markets.

Both US & Indian Markets are leading the World with premium valuation. In my view, this trend may continue till the time we see a significant tapering by US fed or some increased geopolitical risk.  

The risk-reward ratio is higher in midcap & small caps as of now. For larger caps, we can still see some steam left due to some undervalued stocks within NIFTY.

Q) Which sectors will take Nifty50 from 18000-20000 in near future?

A) In my view, the next rally shall be led by banks, automobiles & selected PSU namely.

Q) The market is giving plenty of opportunities to investors to make money, but how should one avoid losing money in this market?  

A) At this moment it is advisable to book profit & park some money in arbitrage or equity saving funds. Later, this amount should be moved back to equity at a better entry point, where we may have lesser risk but higher rewards.

Q) What is your investment philosophy? Has your holding in cash increased amid the recent run-up in prices?

A) Yes, we have increased our allocation in cash. At this moment, we are focusing on value stocks rather than tracking individual indices. We see a very limited opportunity for value buying at this moment, hence wish to invest only in selected themes.

(Disclaimer: The views/suggestions/advices 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.)