'The long-term impact of elections is minimal.'
'Valuations of midcaps and smallcaps have reached very high levels, and hence to that extent leave little margin of safety.'
'Given the inherent volatility, investors should take at least a three to five-year view.'
'We see mid-and small-caps as a real pot of gold.' 'From a 10-15 years perspective, mid-and small-cap are likely to outperform the larger index, as they have done in the past.'
'Rather than taking a very short-term view on the markets, equity investing should be premised on longer term growth opportunities.'
'More than investors, fund houses, and advisors have raised caution and limited flows on small-and mid-caps.'
'For experienced and risk-taking investors, now may be the time to go all in.' 'By 'experienced and risk-taking', I refer to those who remained net buyers in equities during the early stages of the 2020 pandemic.' 'On the other hand, those who exited the markets during the pandemic may go the SIP way.'
'We like certain stocks from banking, insurance, retail, hospitals and capital goods.' 'Though some of these stocks may seem expensive, they will compound well over the long term, thus justifying their current multiples.'
'In case the El Nino pattern plays out negatively and/or the political situation becomes messy, we may see markets correcting and waiting for the situation to become clear by early/mid-2024.'
'...over the long-term can be done only by investing in equities.' 'And during weak macros, one needs t1o allocate more than drawing it down, because they offer the best entry point.'
'It will dictate the flow of funds into the index. We will maintain caution on mid/smallcaps.'
The sharp rally in the markets thus far in fiscal 2023-24 (FY24) has left analysts struggling to find investment-worthy themes. The S&P BSE Sensex has surged nearly 7 per cent thus far in FY24 and hit a fresh 52-week high of 63,601.71 levels on June 22, mostly led by foreign institutional (FII) flows. "The Indian market has seen a broad rally in the past few months but headline indices have seen more modest performance. "We are not very clear about the reasons for the rally and the divergent performance and struggle to find ideas in the consumption, investment and outsourcing sectors after the sharp run-up in several of our favored sectors and stocks in the past two months," wrote Sanjeev Prasad, co-head, Kotak Institutional Equities, in a recent co-authored note with Anindya Bhowmik and Sunita Baldawa.
Foreign portfolio investor (FPI) flows into India may remain tepid in 2022, said a recent note by Goldman Sachs, who now peg the foreign portfolio investment into India at $5 billion in 2022, down from their earlier forecast of $30 billion with risks skewed to the downside. "There has been $15 billion of equity outflows YTD in India already, and the IPO of the largest insurance company has been pushed out. "Additionally, with no mention of India's inclusion in global bond indices in the Union Budget, there are risks to our already conservative base case assumption of an announcement of India's likely inclusion into the GBI-EM Global Diversified Bond Index in Q4-2022," wrote Andrew Tilton, Goldman Sachs' chief Asia-Pacific economist in a co-authored report with Santanu Sengupta and Suraj Kumar.
'The risk is in not being invested and missing out on an upmove.'
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
'We are in a sweet spot.' 'Equity, on a standalone basis, will continue to remain the asset class to stay invested in.'
'The main worry is lots of new investors coming into the markets in order to make a quick buck/easy money.' 'Those things are happening again and have happened in the past as well.' 'All that has led to problems.' 'We are not there yet, but will get there eventually.'
Earnings growth, attractive valuations and change in FPI flows from negative to positive over the next 12 months are some of the key triggers for an upside. "A poor monsoon, high inflation and further rate hike are some of the key risks
However, in the last few sessions, the stock of Mukesh Ambani-controlled Reliance Industries Limited (RIL), hit its 52-week low level of Rs 2269.75, and has been one of the worst performers among the Sensex pack thus far in calendar year 2023 (CY23). Thus far in CY23, RIL has tanked nearly 11 per cent as compared to a fall of around 5 per cent in the S&P BSE Sensex. The fall in the stock, according to Gaurang Shah, senior vice-president at Geojit Financial Services is mostly due to the overall dip in the market sentiment, which in turn has impacted large-caps, including RIL.
'The market should maintain optimism on the back of range-bound oil prices, a robust fiscal balance sheet, a better-than-expected monsoon, and moderating inflation.'
An aggressive rate hike by the US Fed and the possibility of a recession can trigger a slide in these stocks, which will be a good opportunity to buy from a long-term perspective.
'Earnings will be the catalyst for markets to march higher from here on out.'
'Historically, equities have consistently outperformed debt, gold, property, and other assets over a reasonable period.'
'Markets are not expensive; they are fairly priced.'
'India is an equity market with a breadth and depth of companies to invest in.'
'Geopolitical risks and their impact on oil prices, if any, are another concern for global markets, particularly for India.'
'Indian equity valuations, although not very expensive, are not cheap either.'
'If there is any reason to change my holding in Adani group stocks, the Hindenburg report on the group is not the one.'
'Markets could face uncertainty in the short to medium term.' 'It would be prudent to invest in alternative asset classes, especially debt, for about a year.' 'Bank fixed deposits are offering rates as high as 9 per cent per annum and these can be used as a great hedging tool until equity markets stabilise.'
'The Fed rate will peak in the range of 5.1-5.3 per cent during the second quarter of CY23 and will most likely stay there for a while before rate cuts start in CY24.'
'While foreign institutional investor flows are still negative, they will turn positive in the latter part of 2023 as India's resilient growth becomes perceptible.'
'The market will focus on the fact that India does have strong earnings growth this year.'
'Sectors that had been left out till now will also start participating in the rally.'
Investors with high risk appetite must stay invested while risk-averse investors can consider profit booking.
'We remain positive on technology, private sector financials, gas, infrastructure, and export-oriented plays.'
'As the Indian economy continues to expand over the next three years, mid- and small-caps should do well as they have higher exposure to the domestic economy than large-caps.'
'There will be a series of rate hikes, but the pace and quantum will depend on how the economy in the US and the rest of the world behave.'
After a stellar run that saw the frontline indices - the S&P BSE Sensex and the Nifty 50 - clock gains of around 21 per cent and 24 per cent respectively in calendar year 2021 (CY21), the year gone by in real sense belonged to the mid-and small-cap segments. Thus far in CY21, the mid-and small-cap indexes on the BSE have far outpaced the run in the frontline indices and notched up a gain of around 38 per cent and 61 per cent, respectively during this period. Though analysts expect the outperformance to continue in 2022, they caution against the multiple headwinds in the year ahead that may dent the overall market sentiment.
'There is still scope for selective stockpicking.'
'Indices will remain range bound in 2022 as earnings catch up with the current multiples.'
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