One should not try to time the market. There are many stocks which have potential to double in next two to two and half years but it is very difficult to find stocks which has potential to go four times or five times.
In an interview with Vrinda Sharma of Zee Media Corp, Rakesh Bansal of RK Global, shares his views on equity market trend, outlook and fundamentals
Which are the sectors and themes that you find attractive in the market at present?
Market overall is looking very attractive. I am betting on Infrastructure sector which is a beaten down sector and I am also betting on the revival of Indian economy. One should also bet on railways and defence sectors because these are the two sectors which have never participated in any bull rally. You must have seen in the past that each and every bull rally has some different leaders --like in 1992 cement was leader, thereafter IT followed by infra, FMCG and pharma. I feel, in this ongoing bull rally ignited by BJP government led Narendra Modi forming government at the centre. I feel defence sector along with railway stocks are likely to outperform broader market. Investors should accumulate these two stocks.
What would be your advice to equity investors at this stage?
I feel that this bull run is going to continue for next 4 to 5 years. Each and every bull run has 3 phases-- one is the accumulation phase in which smart investors make money, then there is participation phase which is for shorter duration. I feel participation phase is the longest ever phase that Indian market has witnessed. This phase is going to last for 4 to 5 years.
What will be your portfolio strategy for coming months?
In the coming months one should buy pharma, infra or IT stocks. We are going to see a broad-ways rally so retail investors should invest through ETFs.
What is your outlook for equity market?
My outl ook is clearly positive. Indian equity markets are heading towards new high. I think by next Diwali we will trade around 8,500 plus levels on Nifty.
Why are the markets gaining strength and how much do you think they will gain?
Markets are gaining strength due to two reasons-- the ongoing bull rally in global markets and the policy decisions being taken by the new government. Due to these two factors, the rally will continue and I think we are not going to see any deep correction in near term.
At a time like this, given the macro environment as well as global cues, how are you positioning yourself when it comes to stocks?
We are buying on each and every decline. This is the first time retail investors shifted back to the equity market and I feel one should buy at the current level.
What are the key triggers/ risks that will drive market performance? What could be the next trigger for the Indian markets?
There will be triggers whenever we see decisions happening. For example, when Narendra Modi has scrapped 45GOMs, the markets took it very positively. Further policy decisions taken by the new government will be the next big trigger for the Indian market.
Market risks are always there, like, we saw the snag on BSE couple of days ago. There are also external risks like the Iraq crisis, although, it did not have any serious impact on the market. But anything can happen in global markets will affect the Indian market.
What is your advice to investors in the current market scenario?
This is the time to gain equities. In 2 to 3 years equities are going to out perform each and every asset class.
Right now would you qualify it as cautious positioning, sceptical positioning or almost bullish?
I will say that it is almost bullish but it also depends on where you are investing. If you are investing purely into high beta stocks then you should be cautious. However I think one should buy in diversified portfolios like pharma, FMGC, infra and reality.
If you are playing for an upside this year, can you break it up in terms of timing?
Right now you will find many stocks which has potential of at least doubling from the current level in next 2 years. Lets take an example of NMBC (PSU company), which is iron ore leader and has given a dividend yield of 4.45 percent currently. The scrip is trading at around 180 level. I feel this stock has potential to test 200 levels in next one to one and half months. You never know, the stock might double also in next two to two and half years.
Do you think that much of gains will be front loaded and will come in the next two three months or do you think gains will probably accelerate in the fourth quarter of this financial year?
I think we are in a bull rally. One should not try to time the market. There are many stocks which have potential to double in next two to two and half years but it is very difficult to find stocks which has potential to go four times or five times.
Is market ignoring the bad news and capitalising on the good news?
No market counts each and everything in advance. Worst is already discounted into the market and it is not discounting the future. I think worst is behind us and market is heading northwards only.