The second wave of the coronavirus pandemic might not result in a significant correction for Sensex and Nifty unless it lasts a few months, said Amit Jain, Co-Founder and CEO, Ashika Wealth Advisors in an interview with Kshitij Bhargava of The Bharat Express News Online. Amit Jain, the market expert with nearly two decades of experience, believes IT, pharmaceuticals and FMCGs are among the sectors that investors could focus on, expecting strong results . Additionally, Jan believes that in the post-pandemic world, India could become the manufacturing hub of the world. Here are the edited excerpts.
Q The equity markets are currently down from their all-time highs, where do you see opportunities in this market?
The market is down 8% from its current high and this can be a good opportunity to allocate 20% of the money to stocks, but only in certain sectors. In my opinion, IT, Pharma, FMCG, consumer durables will continue to have strong results. From a contrarian perspective, we continue to be bullish on infrastructure, real estate and some PSUs, as we said earlier.
Q The commodity cycle is the buzzword on Dalal Street, are you buying that argument that commodities stocks are going into a massive bull run?
Almost six months ago we advised entry into commodity stocks and since then the NIFTY metals index has risen almost 70% and individual stocks have risen almost 200%. In my opinion, this is the last stage in the commodities bull run due to the excessive printing of money by the US Fed, which could last another six to nine months. In my opinion, it is time to ease the commodity position in the short term.
Q India is witnessing the second wave of covid-19 cases. While the vaccination campaign is expected to gain momentum now, what implications, if any, do you see for the stock markets if the second wave continues?
Yes you are right the second wave is here but in my opinion it may be less fatal than the first wave because now the world knows about the virus and is partially ready to deal with it unlike the first wave. If this wave extends over a few months, the market may have an excuse for a further significant correction.
Q India has undertaken serious reforms over the past year and the economic outlook looks good; Which sectors do you think is the best bet on India’s growth history to come?
Yes, India has taken appropriate steps to stimulate the economy during the Covid-19 pandemic, which laid the foundation for a much stronger Indian economy by 2030. In the post-Covid-19 era , when the world talks about “social distancing” from China, all these sectors will benefit in India where currently China dominates the world. In my opinion, “India” could be the new manufacturing center of the world by 2030, if the current pace of reform continues. The Indian could be one of the main exporters of information technology and pharmacy for the world economy by 2035. The world has no alternative to India, because it is the the only economy in the world to have a dividend that is both democratic and demographic for the next fifteen years. This duo combination is rare in the world, from where the entire world capital, whether FDI or FDI, will hunt India. Recently, India hit a new benchmark of $ 500 billion in cumulative FDI investments, which reflects Global Capital’s commitment to India.
Q Bond yields are rising, will any further rise in yields pose a threat to REITs that withdraw money from the domestic market in large quantities?
Yes, the yield on US bonds has increased due to fear of inflation from 0.51% in August 2020 to 1.71% on date, which is 300% above the lows in August 2020, but it’s still less than the 2.2% that he hit in the December 2008 post – Lehman Brother crash. In my opinion, in the short term it could go back to 2.1%, but in the long term it will hover around 1.2% to 1.8%. If this yield crosses 2% sustainably in the medium term, it is only then that we fear that FPI will withdraw significantly from the Indian markets.
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