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We need to wait till next week to have clarity if FIIs have changed their negative stance on emerging markets including India. With the US fed tapering there are higher chances that FII flows remain muted in the first half of the calendar year 2022, says Amit Jain, Chief Strategist - Global Asset Class, Ashika Group, in an interview with Nishant Kumar of MintGenie.
Edited excerpts:
As inflation is rising and the market outlook for the near term is hazy, the debate over value vs growth stocks has gained momentum. Is it time to avoid growth stocks and look at the value ones?
In my view, we should have 60 percent weightage to value stocks and 40 percent weightage for growth stocks at this moment in time. Also, I acknowledge inflation, or moving forward stagflation shall be a big risk for global economies. But still, we have some sectors like IT and pharma which are partially inflation risk proof, hence Investors may increase allocation to these sectors.
Rating agencies are cutting India's growth outlook. Morgan Stanley, Fitch Ratings have raised concern over inflation also. What is your view on India’s macro?
India’s macro may worsen if crude remains elevated above $80 dollar for long. Each 10 dollar increase in crude oil price hit India’s GDP by -0.4 percent, hence it may be the biggest risk. In my view, India may still grow more than 8 percent in FY23 irrespective of this temporary up-move in crude oil prices.
What are your expectations for the upcoming earnings season of India Inc.? Can we still see an upgrade for Nifty firms?
The upcoming earnings season for Indian corporates may be muted due to higher input costs in Q4 for FY22. However, we still feel that IT sectors will continue to lead the earnings with an above-average growth rate. In Nifty, we see some upgrades in banking, FMCG, auto and metal space over the next six quarters.
FIIs seem to be coming back to the market after the Fed has started hiking rates. While Fed tapering is seen as bad for negative markets, do you think FIIs will continue to stay away from the Indian market?
Yes, FIIs have lowered the intensity of their selling in Indian markets, even for a couple of days, they had been net buyers. But it is too early to say a reversal of the trend for FII selling yet. We need to wait till next week to have clarity if FIIs have changed their negative stance on emerging markets including India. With the US fed tapering there are higher chances that FII flows remain muted in the first half of the calendar year 2022 (H1CY22).
What sectors are you betting on at this juncture? Would you recommend buying banking and financial stocks to investors?
At this moment we see some value buying opportunities in the banking, FMCG, pharma & infrastructure sector. We may have some multi-baggers in these spaces in the next five years.
