BSE Sensex is expected to reach a new all-time high of 65,000 by December 2022, Sunil Damania, Chief Investment Officer, MarketsMojo, said. In an exclusive interview with Surbhi Jain from FinancialExpress.com, Sunil Damania said that despite global uncertainty, high crude oil prices and rising interest rates, India Inc. recorded both year-on-year and sequential growth in revenue and in bottom line, which shows the strength of India Inc’s growth story. For new equity investors, Sunil Damania advised that equity markets should not be seen as a platform to double your money in one year or less. He suggested that investors who are new to stock markets should have a 3-5 year investment commitment. Here are the edited excerpts from the interview.
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Where do you see BSE Sensex and Nifty 50 in December 2022?
The Indian stock market fell significantly in the first half of 2022. But sentiment has revived since July, and as we speak, underlying sentiment remains extremely bullish. One of the main reasons for the impressive spread of Indian equity markets after June was due to strong GST recoveries. In addition, direct tax collection has been exceptionally strong, suggesting healthy underlying growth in the economy as global economies struggle. The Rupee after touching Rs 80 stabilized, moving in a very narrow range. All of these factors contributed to the comfort of the FII which came back strong in July and August. We believe FII will remain positively positive on India’s growth story.
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The first quarter of June 2022 was plagued by global uncertainty, high crude oil prices, rising interest rates and other concerns. Still, India Inc. recorded year-on-year growth in both revenue and net income. It should be noted that India Inc.’s revenue quarter over quarter also increased. Normally, the March quarter is viewed as the best quarter for India Inc. Yet, we saw revenue growth for June quarter over quarter. This clearly shows that there is strength in India Inc’s growth story, and we believe the BSE Sensex could hit 65,000 by December 2022.
In the current market scenario, where should investors look for buying opportunities?
This is a market where you have to adopt a bottom-up approach with an equity strategy. Indeed, within the same sector, we have seen a divergent performance of equities. This means that even if your call to an industry is correct, you may be invested in the wrong company. Therefore, we suggest taking a stock-specific approach when investing in stock markets. At the same time, we also recommend taking a portfolio approach and deliberating on 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; or the investor may have a high exposure to a sector or market capitalization without realizing the danger this poses to the portfolio. Therefore, we suggest taking a bottom-up approach and investing with portfolio construction in mind.
What are your overweight and underweight sectors and stocks?
We think the capital goods sector should do well. Our Mojo list recommends several stocks of capital goods to buy. We also think the automotive and automotive auxiliary companies will do reasonably well. And at the same time, some paper stocks that had significantly underperformed began to outperform. As a result, we think capital goods, automotive and automotive auxiliaries, and paper would now look promising.
What do you think of new age internet stocks – Zomato, Paytm, Nykaa?
Here, we think players like Zomato and Paytm might struggle given their not-so-robust business models. Also, the type of valuations they commission don’t leave much room for capital appreciation. On the other hand, Nykaa seems to have done a pretty good job when it comes to strategy. Therefore, given the choice between the three, we would choose Nykaa.
What stock market strategy for new investors?
New investors just need to approach stock investors with patience and discipline. Retail investors tend to get carried away with market sentiment and do something they’re not supposed to. Stock markets should not be seen as a platform to double your money in a year or less. Therefore, we suggest investors new to the stock market to have an investment commitment of 3-5 years. Therefore, enter the stock markets with a minimum horizon of 3 to 5 years; adopt a portfolio approach and avoid chasing dynamic stocks. Ideally, new investors should turn to professional stock market experts who have investors’ interests in mind. At MarketsMojo, our hands-off intervention gives us a superior edge when advising on stocks because our research and analysis is data-driven, free from human emotion or bias.