In an interview with ETMarkets, Agrawal said: “BFSI, Real Estate, Auto, Cement, Engineering/Cap Goods, Infra, Railways, Defence, Renewables, IT, Biofuels etc are the preferred picks for next 12 months,” Edited excerpts:Sensex touched 70K while Nifty50 was above 21K – we got a Fed boost towards the close of the week. What is your view on the market?
From the next 6 to 12 months perspective, we expect the domestic equity market to remain buoyant and have room to further go up by 8-10%.
Key events which the Street will track are:
a) Ensuing 3QFY24 result season which will kick start from the 2nd week of Jan24.
b) Union Budget – This time the union budget will be voted on account and some minor sops may be offered to the salaried class by likely tweaking of the tax slabs. The twin objective of minor relief to the taxpayers coupled with encouraging taxpayers to shift to a new tax regime is likely to be achieved by tweaking the tax slabs. However, the final budget will be presented by the newly elected government in the month of June-July 2024.
c) Announcement of schedule and outcome of General Election: As of now, the Street is discounting that the existing ruling party is likely to win & is likely continuing to manage the affairs for the next 5 years, thereby ensuring political stability.
d) With dovish commentary coming from the US Fed Governor, the street is expecting 3 rate cuts in the US in CY24. With interest rates peaking in the US coupled with the weakening of the Dollar, we expect global fund managers to chase riskier assets like EMs like India & commodities. Hence, Indian equity markets are likely to witness a liquidity tsunami from FIIs coupled with DIIs and retail/HNIs sitting on the fence. Having said that, there seems to be exuberance in select pockets like microcaps, SME IPOs, etc and investors should use the opportunity to churn the portfolio by exiting dud stocks and gradually deploy the incremental corpus in the quality profitable businesses in the medium term.
We are in the last month of 2023 – any key learnings that you would like to share?
During the last 12-13 months, equity markets were very choppy with Nifty50 scaling lifetime highs of 18,887 on 1st Dec22 and then there was a continuous slide to levels of 16,828 till 20th Mar23, led by concerns of an aggressive rate hike by the US Fed.
Post that, during the April 23-till date, domestic equity markets are in a continuous uptrend and have scaled new life highs of 21,456. This clearly shows markets always climb the wall of worry and investors should avoid timing the market.
Time spent in the market is more important. At the same time, at any point of time, a bull run is seen in one or other sectors and if investors are on the right side of the market, then they can create decent wealth even during the bear market phase.
Which sectors are you tracking for the year 2024 – or sectors that are likely to be in focus in the next 12 months?
BFSI, Real Estate, Auto, Cement, Engineering/Cap Goods, Infra, Railways, Defence, Renewables, IT, Biofuels etc.
Any sector/theme that you think is looking overheated?
We feel that microcaps and SME IPO segments seem to be overheated. One needs to remain cautious and not get carried away in the exuberance.
One space that is looking overheated is the small & mid caps space – what would you advise investors for the year 2024?
At the current juncture, the risk-to-reward ratio looks favourable in large caps as compared to small & midcaps. Having said that, in small and midcaps, money-making opportunity still exists in bottoms-up growth stories in the companies, where the capex cycle has recently been completed or is on the verge of completion and there is robust demand visibility for the product/services.
SIP hit Rs 17000 cr in 2023 — is this the way retail investors can chase the Crorepati dream?
MF SIP is the best way for any retail or novice investor to participate in India’s growth story through equity markets. 1 cr corpus can be achieved with SIP of Rs 10,000 for 20 years, assuming 12% CAGR return.
MF SIP is one of the effective tools of financial planning and one can achieve medium to long-term financial goals by seeking help from a financial planner.
What are the queries that you are getting from your clients, especially at a time when markets are @ record highs?
FOMO is visible amongst the market participants who were sitting on the sidelines waiting for equity markets to correct. Investors are showing signs of urgency to deploy the capital in the market. We are suggesting a buy on dips strategy to our clients.
What is your view on Gold in 2024 which also hit fresh record highs in 2023? Should one increase allocation towards yellow metal/SGB in the new year?
As a prudent hedging strategy, one can keep 5-10% of the portfolio invested in the gold. SGB is one of the best tools to allocate the corpus towards gold.
Historically, it has been seen that whenever the US Fed began rate cuts, commodities including gold rallied. With the US Fed likely to cut interest rates in CY24, we can expect further upside in the gold prices in CY24.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)