The current surge in Indian markets is attributed to a mixture of resilient macroeconomic indicators and favorable micro-level dynamics, says Siddhartha Khemka, head of retail analysis at Motilal Oswal Monetary Companies Ltd.
In an interview with Moneycontrol, Khemka shared his views on the elements driving the bull run, potential threats, sectors of optimism and short-term funding suggestions.
Catch all of the market motion LIVE
What’s resulting in the bull run?
Breaking free from an 18-month range-bound section, Indian markets achieved new highs in June 2023. Khemka stated the present rally is supported by sturdy macroeconomic elements, together with a wholesome 7.2 % GDP development in FY23, managed inflation and rates of interest, a powerful exterior steadiness, and stability in forex. He additionally underlined that microeconomic indicators stay steady supported by wholesome company earnings, anticipated high-teens development in FY24, and commodity value corrections.
The resurgence of Overseas Institutional Investor (FII) flows put up March additional bolstered market energy, he added.
Additionally Learn: ‘Don’t overstay your welcome’: Fund supervisor with Rs 260 crore AUM shares classes for traders
Key threats to the bull market
Khemka highlighted three substantial threats to the continuing rally out there. International development considerations and geopolitical dangers stay important elements, exemplified by current occasions comparable to Moody’s downgrade of US regional banks and Italy’s surprising banking tax.
He additionally famous China’s ongoing challenges in stimulating its economic system. Extended greater international rates of interest may significantly have an effect on sectors like commodities (metals and oil & gasoline) and expertise, which collectively contribute round 40 % of Nifty’s revenue pool, he stated.
Sectors with a constructive outlook
Khemka expressed optimism relating to a number of sectors comparable to financials, auto, capex (together with industrials, capital items, infrastructure, and cement), and consumption. He famous that wholesome mortgage development continues within the monetary sector, significantly in retail and SME segments.
He additional stated that within the auto sector, development is anticipated throughout all classes, fuelled by the upcoming festive season and improved rural demand pushed by regular monsoons, higher crop yields, and lowered inflation considerations. Capex-driven sectors are set to prosper resulting from authorities infrastructure thrust and revival of personal capex, Khemka stated.
Brief-term funding suggestions
Khemka provided short-term funding insights by recommending these shares:
M&M: The potential for outperformance in each SUVs and tractors resulting from elevated demand and new launches.
IDFC First Financial institution: Anticipated to ship sturdy 25 % CAGR mortgage development over FY23-25, with moderating impression from the wholesale guide.
Poonawalla Fincorp: Sturdy moats in legal responsibility, supported by sturdy parentage, offering development alternatives in focused product segments.
Additionally Learn: ‘Don’t overstay your welcome’: Fund supervisor with Rs 260 crore AUM shares classes for traders
Godrej Shopper: Improved gross sales development within the Indian enterprise and gradual enhancement of abroad enterprise profitability.
Solar Pharma: Backed by a powerful modern merchandise franchise for international markets and robust efficiency in branded generics markets.
Khemka additional suggested retail traders to train warning in globally-linked sectors comparable to commodities and expertise resulting from unsure international well being circumstances. Nevertheless, he expressed a constructive long-term outlook for the expertise sector, citing ongoing secular demand.
Adblock check (Why?)