INSUBCONTINENT EXCLUSIVE:
By DK Aggarwal The domestic stock market is witnessing volatility led by a series of domestic and global events and is also facing a risk
ahead of the forthcoming general elections.
The volatility seen in the market will continue at least till the election results are out
However, the silver lining is that after seeing a selloff for several months, foreign investors have now turned net buyers in February,
mainly on account of clarity on government spending post budget, dovish stance taken by the central bank, improving valuations and expected
earnings recovery.
Meanwhile, PMI numbers and latest auto numbers seem to be in the recovery mode, which indicates green shoots of
recovery.
The recent traction in earnings was improving and was better than the expectation
On the flip side, the economy is not growing as expected and the recent GDP number for Q3 was at 6.6 per cent against 7.7 per cent in the
same quarter last year and 7 per cent in the previous quarter
It is expected that the weakness in the economy may keep RBI’s stance dovish and supportive.
Moreover, the government seems to have been
very optimistic about estimates of direct taxes
The recent Skymet projection for a normal monsoon in 2019 will continue to boost confidence of market participants as good rains may
stimulate the rural economy.
Volatile markets give investors an opportunity to accumulate quality stocks
The consumer durables story has played out very well and recent auto numbers are signalling positive traction to the automobile sector (two
It is expected that these sectors would continue to do well as various government subsidies and schemes targeted to improve rural income
levels have started showing positive results.
Consumer durables companies, too, have come up with numerous tailor-made solutions to bring
best technologies at best prices
With a rising middle class with higher disposable incomes along with favourable demographics, the sector is expected to see growth.
On the
economy front, the Indian economy is poised to grow at a healthy pace due to its robust fundamentals
As of now, agriculture, fast-moving consumer goods and auto and auto ancillary sectors are looking quite attractive for long-term investment
Besides, the BFSI sector has shown remarkable improvement in financial performance and NPAs have begun to recede
The IT sector, too, has been growing significantly.
The focus should be on the largecap stocks, which have businesses with strong and
consistent earnings growth along with cautious and experienced managements
Also, one should keep 15-20 per cent portfolio in cash to take advantage of good opportunities.
