BSE Sensex is likely to hit a new all-time high of 65000 by December 2022, Sunil Damania, Chief Investment Officer, MarketsMojo, said. In an exclusive interview with Surbhi Jain of FinancialExpress.com, Sunil Damania said that despite global uncertainty, high crude oil prices, and rising interest rates, India Inc. delivered both on-year and sequential growth in topline and bottom line, which shows strength in India Inc’s growth story. For the new stock market investors, Sunil Damania advised that equity markets must not be perceived as a platform to double one’s money in one year or less. He suggested investors new to the equity markets have a 3-5 year investment commitment. Here are the edited excerpts from the interview.
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The Indian equity market substantially declined in the first half of 2022. But sentiments have revived since July, and as we speak the underlying sentiments remain extremely bullish. One main reason for the impressive stretch of the Indian equity markets post June was due to robust GST collections. Also, direct tax collection has been exceptionally good suggesting a healthy underlying growth in the economy, as global economies struggle. The rupee after touching Rs 80 has stabilized, moving in a very narrow range. All these factors have helped comfort FIIs who returned strongly in July and August. We believe that FIIs will remain constructively positive on India’s growth story.
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The first quarter of June 2022 was rife with global uncertainty, high crude oil prices, rising interest rates, and other concerns. Yet India Inc. delivered YoY growth both in topline and bottom line. What is worth noting is that India Inc.’s topline quarter-on-quarter has also increased. Normally, the March quarter is perceived as the best quarter for India Inc. Yet, we saw a growth in the topline for the June quarter-on-quarter. That clearly shows there is strength in India Inc’s growth story, and we believe the BSE Sensex could touch 65000 by Dec 2022.
Amid current market scenario where should investors look for buying opportunities?
This is a market where one must adopt a bottom-up approach with a stock-specific strategy. That’s because, within the same sector, we have seen a divergent performance of stocks. That means, even if your call on a sector is right, you could happen to be invested in the wrong company. Therefore, we suggest taking a stock-specific approach when investing in equity markets. At the same time, we also recommend taking a portfolio approach and deliberate upon the amount and level of exposure for a particular sector or market cap. Invariably, investors take an ad-hoc approach that results in an imbalance; either the investor may have a high exposure to one sector or market cap without realizing the danger it poses to the portfolio. Hence, we suggest taking a bottom-up approach and investing keeping the portfolio construct in mind.
What are your overweight and underweight sectors and stocks?
We believe the capital goods sector should do well. Our Mojo list recommends several capital goods stocks to buy. We also believe auto, and auto ancillary companies will do reasonably well. And at the same time, some paper stocks that had underperformed significantly have started excelling. Hence, we believe capital goods, auto and auto ancillary companies, and paper would appear prospective from here on.
What are your views on new age internet stocks — Zomato, Paytm, Nykaa?
Here we believe players like Zomato and Paytm could struggle given their not-so-robust business models. Besides, the kind of valuations they command doesn’t leave much scope for capital appreciation. On the other hand, Nykaa seems to have done a fairly good job regarding strategy. Hence, given a choice between the three, we would choose Nykaa.
What should be the stock market strategy for new investors?
New investors must simply approach equity investors with patience and discipline. Retail investors tend to get carried away by market sentiments, doing something they are not supposed to. Equity markets must not be perceived as a platform to double one’s money in one year or less. Hence, we suggest investors new to the equity markets to have a 3 – 5-year investment commitment. Therefore, enter equity markets with a minimum of 3 -5 years horizon; adopt a portfolio approach and avoid chasing momentum stocks. Ideally, new investors must look to professional stock market experts that keep investors’ interests in mind. At MarketsMojo, our zero-human intervention gives us a superior edge when advising stocks as our research and analysis is data-driven without human emotion or bias.