Apurva Sheth, Head of Market Perspective and Research, SAMCO Securities, sees Nifty hitting 20,600 mark by December 2023. In an interview with MintGenie, Sheth stated that an ideal portfolio could have 60-70% equity allocation while the remaining portion can be spread out evenly between gold and fixed-income securities. However, the allocation should shift more towards gold and fixed income as we move closer to the general elections next year, he added.
Edited excerpts:
What is your Nifty target for 2023-December?
Nifty is in a consolidation phase after it touched the psychologically important mark of 20,000. Crossing such a milestone creates a euphoric environment which is generally followed by a correction. Nifty is going through one such corrective phase which is healthy for the markets. The 10-year US bond yields have also played spoilsport, which has moved above the previous high of 4.335%. The yields are at a 16-year high now, which is why FPIs have withdrawn funds leading to a fall in markets.
If interest rates peak out in the next FOMC meeting and bond yields head lower then it could be a big positive for the markets. Thus, we will look forward to the possibility of a peak in bond yields and Nifty once again crossing the 20,000 mark. If both these events, as suggested above happen in the next few weeks then there is a high probability of Nifty hitting the 20,600 mark and even higher levels by December 2023.
Even though most experts have advised caution against mid and small-cap space, there is no stopping the broader markets. Why have they continued to soar?
The rally in mid and small-cap space was going out of control and a correction was certainly required which we have got. However, there are still certain pockets in this space that continue to do well despite limited changes in fundamentals. Take PSU for example. Share prices of some PSU stocks have been rerated without any meaningful change in fundamentals. We would recommend investors to steer clear of such stocks.
Do you advise investors to jump into this ongoing trend and accumulate more mid and small-cap stocks?
We advise investors to refrain from accumulating any mid-cap or small-cap stocks just because they are moving higher. We have seen such cycles play out multiple times and it doesn’t end well. Hence, one must buy only fundamentally strong stocks available at decent valuations.
Is now the ideal moment to purchase shares in the newest IPOs, given the lofty market valuations and record highs?
No, one must wait for a decent entry opportunity in the new IPO stocks. We have observed that most IPOs are generally overpriced and trade below their listing price after a few months. Thus, one must wait for the stocks to cool down and build a base at least for six months. Once these stocks start trading above their listing price and previous highs, that’s the time to buy them as then there will be limited selling pressure in these counters.
Which sectors would you recommend staying away from currently?
Crude oil has been racing higher and trading above the $90/ barrel mark. One should stay away from industries like aviation, tyres, and paints which have crude oil and its derivatives as an important raw material. One should also stay away from oil marketing companies as they won’t have much pricing power if crude spikes higher from here given that we are heading for elections soon.
What advice would you give long-term investors in this bull run? How can they protect their portfolio from future losses?
Investors can protect their portfolios by diversifying in non-correlated assets. So if you have all your investments into equities whether large, mid, or small-cap, it won’t matter much. If there is a crash in the markets, it will affect all three. But if you have allocations towards gold, silver, currency, and fixed-income securities, then the overall impact on your portfolio will be minimised.
What should be their strategy for the upcoming IPOs?
One must evaluate IPOs on a case-by-case basis and check if the listed peers are trading below the recently listed firms. If the peers with similar growth potential are trading at lower PE multiples then one must book profits as the multiples will cool off eventually.
What, as per you, is a perfect model portfolio, with a 3-5-year perspective?
An ideal portfolio could have 60-70% equity allocation while the remaining portion can be spread out evenly between gold and fixed-income securities. The allocation should shift more towards gold and fixed income as we move closer to the general elections next year. Elections are bound to create some volatility in the markets which will be difficult to digest for many players. Hence, one must lower his/her exposure and wait on the sidelines for the dust to settle.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.
