In an interview with Business Standard, Nischal Maheshwari, chief executive officer for Institutional Equities at Centrum Broking, said that he believes the road ahead for the Indian market is contingent upon how US inflation moves and how quickly a reversal of global monetary stimulus happens.
"I don’t think the Indian markets will enter bear territory any time soon," the market expert was quoted as saying.
However, he pointed out that risks are mounting for markets. According to him, these are largely driven by the recent sell-off in one large corporate group and in the short to medium term, risks remain high.
"That said, the Indian markets rose quickly in the past 18 months due to available excess liquidity. Now that liquidity is being taken out, we are seeing consolidation, rather than a downfall, owing to our resilience," added Maheshwari, as per the report.
He further stated that while market technicals – in the short to medium term – may remain uncertain, it does not take away strong growth prospects for the Indian economy. Also, profit margins for Indian companies are likely to improve as input costs have stabilised since last year and multiple sectors are poised for strong capacity expansion, the expert mentioned, as per the report.
Maheshwari advised that since Indian markets could face uncertainty in the short to medium term, it would be a prudent move to invest in alternative asset classes, especially debt, for about a year, it added.
Owing to the high interest rate regime, bank fixed deposits are offering rates as high as 9 percent per annum and these can be used as a great hedging tool until equity markets stabilise, he said in the BS interview.
He also noted that in 2023, one needs to be more stock-specific and consider a bottom-up investing approach. He is bullish on the consumption theme in India.
"While rural consumption is yet to pick up the pace, we have seen the high-end, luxury segment grow exponentially. High-end hotels, apartments, and restaurants are seeing record-high occupancies. It is only a matter of time before rural demand jumps on the bandwagon," the expert was quoted as saying.
He is also positive on banks, fast-moving consumer goods, cement, automotive, and construction while remaining underweight on information technology, commodity, and pharmaceutical due to significant dependencies on the West.