In an interview with ETMarkets, Kulkarni said: “Consumption-oriented sectors are also likely to rebound by next Diwali, as this segment is expected to experience a significant uptick.,” Edited excerpts:
Thanks for taking the time out. It is turning out to be a volatile October but it looks like Nifty has good support around 24500-25000 levels. What is your take on markets?
The stock markets have been relatively stable over the last two months since the beginning of October. Although the market did reach new highs at times, overall returns have been modest.The financial results for the first quarter of FY25 were generally below expectations, and the results for the second quarter of FY25 are also sluggish. However, the second half of FY25 is expected to be better.As a result, the market is likely to stabilize around these levels, with large cap stocks continuing to offer good value at current levels.
Considering the potential for improvement in the second half of the year and the reasonable valuations of large cap stocks, it is anticipated that the NIFTY 50 index will have limited downside and should remain around current levels.
We saw the biggest IPO to hit D-Street this month. History suggests most of the big-ticket IPOs with issue size of more than Rs 10,000 cr have failed to deliver. What are your views?
The pricing of large IPOs has historically posed a challenge for investors, as they are often priced to perfection, leaving little room for potential gains.
However, the success of each IPO depends on the company’s underlying fundamentals and future growth prospects.
It is difficult to predict which large IPO will meet investor expectations, as historical data does not favor such offerings due to pricing challenges.
What about sectors – which sectors are looking bullish till the next Diwali?
The banking sector is currently undervalued and facing challenges in the unsecured book of banks. However, these challenges are expected to diminish in the next few quarters as they are cyclical in nature.
The market is anticipated to adjust to normalized credit costs, and the focus will shift back to growth in FY26. Therefore, while banks may face headwinds in the near term, they are expected to deliver strong returns by next Diwali.
In addition to banks, consumption-oriented sectors are also likely to rebound by next Diwali, as this segment is expected to experience a significant uptick. As a result, financials and consumption-oriented sectors are expected to perform well.
Any sector which you recommend investors to pare their positions?
Auto sector is likely to see headwinds as inventory levels are expected to rise which will put pressure on margins. Also, the sector is likely to enter a seasonally lean production period from November to December.
Thus, some short term headwinds are likely to persist for the sector. Short term investors could pare their positions in the sector and possibly re-enter by the JFM quarter of 2025.
Big ticket IT firms have declared their results for Q2. The BSE IT index has risen more than 20% in the last 6 months. What is the sense you are getting from the management commentary?
The current commentary on the sector is mixed. The second quarter is usually the strongest for the sector, but the results have been underwhelming so far. TCS, the largest company in the sector, reported numbers that were below expectations.
The IT sector’s performance is typically driven by positive surprises. While the first quarter results were generally better than expected, leading to high expectations for guidance upgrades, the current outlook is less optimistic.
With valuations reflecting all the positive developments, it’s likely that the sector will consolidate at its current levels.
We are getting Rs 24000 SIP every month – a new record from retail investors. Can retail money save us if global slowdown hits D-Street because earnings will take a hit which are already showing signs of slowdown?
The high SIP persistence and strong retail investment have helped absorb significant FII selling in India over the past month.
This means that even if global markets slow down, domestic investors are likely to be significant buyers at lower valuations, given the substantial returns over the last four years.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)