Despite the recent bearish market scenario, India remains one of the costliest emerging markets in the world. probably because of better growth expectations and the quality of the companies listed. If one compares most of the developed markets too, India remains expensive.”
Nishit Master, Portfolio Manager, Axis Securities predicts the next 6 months’ growth of the market and he says, “We expect the markets to be volatile in the near-term as they brace for a possible recession in the US and EU apart from a tightening liquidity scenario, but in the medium-term, we expect them to stabilize and move higher. We don’t expect any major downgrade to our Nifty earnings estimate. Our year-end target for Nifty is 18,200.”
Currently, Most of the major participants of the market get worried about a recession in the US and Europe, we expect commodity prices, except for energy commodities, to correct. But, once winter arrives in Europe and if there is a shortage of fuel that necessitates the closure of capacities, especially steel and aluminum, then the prices can bounce back swiftly. And some of the new factors could include weaker health of European Banks, weakening of European periphery economies, recession in the US and Europe, etc.
Best advice for investors
The stock market keeps teaching us new things every day, no matter how experienced or intelligent an investor or trader might be. Some basic lessons include:
1) Not to be swayed by market chatter or rumors, especially in fundamentally weak companies
2) Free cash flow generation remains very relevant for valuing companies (Unicorns burning cash and having no realistic pathway to profitability is a losing proposition, in the long term.
3) While investing in equities, one should always have a long-term investment horizon
4) Discipline in investing is as important, if not more than stock picking.
Booming stocks in H22022 and why?
Banks: We like banks, especially the ones with strong CASA franchises, which can help them improve market share and margins in a rising interest rate scenario.
Auto: We like the auto sector on the back of strong demand, falling raw material prices, and improved availability of semiconductors which will help increase production levels.
Capital Goods: Another positive sector is capital goods, where companies have record order books and possibly will also be.