If the recent correction seen in Indian equity market scared you, then sit tight as ‘achche din’ might have already started, suggest experts who feel that Sensex is likely to move in a 10,000-point range from current levels till Diwali 2019.
The S&P BSE Sensex witnessed a volatile 2018 but it has so far recorded gains of little over 8 percent from last Diwali. If the momentum sustains, the S&P BSE Sensex should be able to hold on to 35,000 at the lower end while at the higher end, analysts feel that Mount 45K is in reach, a poll showed.
We spoke to 21 analysts, fund managers and money managers to assess the momentum of markets till Diwali 2019.
Almost 50 percent of the poll respondents feel that the S&P BSE Sensex is likely to hover in the range of 35,000-40,000 while the rest 50 percent feel that the index could move in the range of 40,000-45,000.
For Nifty, almost 57 percent of the respondents feel that the index is likely to hover in the range of 11,000-12,000 while the rest 38 percent are of the view that index could surpass 12K-mark and head for 13,000-levels in the next one year. Only 1 analyst out of 21 feels that the index might break the 14,000-mark in the next one year.
VK Sharma, Head PCG & Capital Markets Group, HDFC Securities, told Moneycontrol that the index is headed for 13,000 by Diwali 2019. “Investors should use the current sale to buy the leaders at a discount. They should catch all the missed trains,” he said.
Benchmark indices saw double-digit fall from their respective highs which have brought down valuations to a more comfortable level for investors who are looking to invest for more than 5 years.
Majority of analysts polled by Moneycontrol recommend investors to buy at current levels, as Sensex has fallen more than 10 percent from its high of 38,989, recorded in the month of August,
As many as 48 percents of the analysts feel that it is the right time to buy, while 38 percent are of the view that investors should hold on for a while. The rest 14 percent did not comment.
The ongoing turmoil led by liquidity crunch fear in the NBFC space, global risk-off sentiment, trade tensions between the US and China, fall in rupee and worries over upcoming state elections as well as general elections next year are some of the factors which will keep markets on the edge till next Diwali (2019).
However, analysts feel that investors should use the current dip to buy into quality stocks if they have an investment horizon of more than a year. For mutual funds, investors can use the dip to top-up funds and stay put with an investment horizon of about 5 years.
As many as 62 percent of the respondents feel that investors should avoid panic-selling, and should stay put in the funds they have invested in for a period of more than 5 years. As many as 29 percent of them feel that investors should use the dips to top-up their funds while the rest recommend investors to use the dip to add new thematic SIPs to their portfolio.
“It is a smart period to be rational and look for high-quality stocks which are available at attractive gains in the long-term. It will be wise to start with a mix of high-quality sectors and stock ideas available at cheaper valuation compared to the averages of last 3 years,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
“We advise exposure in stable sectors like IT, pharma, consumption and also in an export-oriented sector like a chemical. If an investor has risk-taking ability, 15 to 30 percent of the equity exposure can be spread on multibagger ideas in auto, pharma and NBFC sector, these are high-risk and high reward, with a view that equity market will stabilise in the next 2 quarters,” he said.
Where is rupee headed?
The rupee, which has depreciated by about 12 percent against the US dollar from last Diwali and about 14 percent so far in 2018, could stabalise in the next 12 months or so, suggest experts.
As many as 48 percent of the poll respondents feel that the currency could hover in the range of Rs 73-75/USD, while 19 percent are of the view that it could depreciate further towards Rs 78-80/USD, and the rest 33 percent are of the view that rupee could rise, below Rs 73/USD.
"The rupee may, however, not be out of the woods just as yet. How the oil market reacts when the US sanctions on Iran actually come into effect from November 4 remains to be seen. The crude prices could rally again if the supply is constricted," Abhishek Goenka, CEO of India Forex Advisors said.
"The outcome of the US mid-term elections on November 6 will set the tone for the US dollar. The Republicans are expected to retain control of the Senate but concede the House to the Democrats. A stronger than expected show by the Republicans would be positive for the US dollar and negative for EM assets,” he said.
Goenka further added that the Rupee consolidates over the next few trading sessions in the 72.60-74.00 range before we see the next decisive move. However, the broad trend of the USDINR pair is still up.
The big trigger for markets would be the outcome of state elections, suggest experts. As many as 81 percent of the poll respondents feel that the outcome of the state elections will impact equity markets while the rest 19 percent feel that markets are unlikely to get impacted.
During November and December, five states will go to polls and could impact the sentiment for general elections. Most experts feel that the outcome of the polls are in fact precursor to the big 2019 Lok Sabha elections.
“The election period is only going to make Indian equity market more volatile and the increased volatility will create more opportunities for many savvy investors. We believe corporate earnings, movement of the Indian rupee and crude price, political as well as global factors will play a crucial role for the market movement in near term,” Sanjeev Jain, AVP, Ashika Stock Broking told Moneycontrol.
“We advise investors to stay focused on and do investment in the companies, which are fundamentally strong and sound management,” he said.