Large caps to be under pressure as inflation in the US has started to give investors a nightmare, leading to expectations of sooner than expected rate hike from the US Fed, and we expect the selling by FII to continue in the coming weeks also, Rahul Sharma, Co-Founder, Equity99 – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts:  

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Q) The Nifty50 had a touch-and-go moment with 18000 last week, but managed to reclaim towards the close of the week. What led to the price action?

A) Last week was the final week for companies to declare their results for Q2FY22. We have seen a sectorial move in this week with the Realty sector outperforming after good demand and sales declared by realty companies

Auto companies were also in focus, while banks & Metals were underperformers in the week gone by.

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

A) Market is seen consolidating this week. FII has been net sellers considering steep valuations so we have seen midcaps and small caps marginally outperforming large caps this week.

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 the Fed? Will large caps be under pressure?

A) Yes, we expect large caps to be under pressure as Inflation in the US has started to give investors a nightmare which has led to expectations of sooner than expected rate hike from the US Fed. We expect the selling by FII to continue in the coming weeks also.

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) Banking index has taken a major hit this week considering the volatile market condition but IT & Realty sectors have balanced the move, The volatility in the market is seen due to weak global clues. We don`t recommend any fresh buying in the current scenario as we expect some correction in the market in short term.

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

A) Companies have mopped up a whopping $9.7Bn through IPO in the first 9 months of FY21, we saw many good companies listed in this phase.

We are highly bullish on Clean Science Limited as it is one of the leading chemical manufacturers globally.

It manufactures functionally critical specialty chemicals such as Performance Chemicals (MEHQ, BHA, and AP), Pharmaceutical Intermediates (Guaiacol and DCC), and FMCG Chemicals (4-MAP and Anisole). The company generates 69% of its revenue through exports outside India.

(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.)