There has been no stopping the Indian markets these past few weeks as they have scaled fresh peaks. In an interview with Business Standard, Vinay Jaising, managing director of portfolio management services at JM Financial Services said that India is relatively expected to outperform its peers in the next six months. However, he cautioned that in case the US undergoes a strong recession, Indian markets can also fall or have a time-wise correction. But, Jaising does not expect it to be steep.
Investors, he observes, should add stocks on every decline.
The expert told BS that since April, the Indian market has been the second-best performer after the Japanese (Nikkei) equity market. However, he also pointed out that year-to-date, the MSCI India index has been a relative underperformer, and many of our rich historic relative valuations have time-corrected.
"On an absolute valuation, though, India is at its peak index level but trades close to the last five-year average. Our earnings growth trajectory — at a 15 percent compound annual growth rate in the next two years — is on the upswing, compared to the rest of the world, where we expect increasing interest rates for at least a quarter and a possible recession, as showcased by the US’ inverted two-year and 10-year interest rates," he further said.
Talking about strategy, the expert suggested that certain investments or stocks have become extremely expensive, or the business thesis has changed. In such cases, he added that investors can swap and start accumulating stocks in capex-linked sectors.
"We have started focusing a lot more on domestic-facing sectors, especially those related to capital expenditure (capex). Defence, water treatment, power equipment, and building material companies, including cement, are all linked to the capex growth of the country. This trend, we believe, is only growing," he recommended.
