In an interview with ETMarkets, Bahl said: “While the overall market outlook is expected to remain positive, investors should exercise caution and consider paring their positions in sectors in which companies face corporate governance challenges or lack robust fundamental support” Edited excerpts:
It is turning out to be a volatile October, but it looks like Nifty has good support around 24500-25000 levels. What is your take on markets? October can often be a volatile month due to various factors like earnings reports and economic data releases. The volatility we’ve witnessed this October is largely driven by heightened geopolitical tensions, particularly the ongoing conflict in the Middle East.
Despite this, Nifty has found strong support around the 24,500–25,000 levels, due to the robust domestic inflows from DIIs, driven by increased retail consumer investment.
Further, history shows us that Nifty has closed in the green in eight of the last ten years during this period, signaling the possibility for cautious optimism.While the market is navigating challenges, the positive investor sentiment suggests that growth opportunities may emerge, setting the stage for potential upward movement. We saw the biggest IPO to hit D-Street this month. History suggests most of the big-ticket IPOs with issue size of more than Rs 10,000 Cr have failed to deliver. What are your views? It’s true that large IPOs, particularly those over ₹10,000 crore, have faced challenges post-listing. Historically, large IPOs have seen significant price corrections post-listing, especially if they’re perceived as overvalued.While big-ticket IPOs can generate significant buzz, they often come with high expectations that can lead to volatility.
Hyundai Motor recent IPO with an issue size of ~₹28,000 crore opened at a 1% discount in a period which is largely marked by exorbitant GMP’s.
Historically, companies with an issue size over ₹10,000 crore tend to be mature and further on in their life cycle, having already moved beyond their high-growth phase, dissuading high return/high risk investors.
Investors are more attracted to businesses in their growth stages, where the opportunity for future expansion and returns is greater, underscoring the importance of growth prospects in building market confidence.
If the company has strong fundamentals and growth potential, it might still perform well over the long term, despite initial fluctuations.
What is your take on gold? The yellow metal is trading near record highs & we are approaching dhanteras as well. Time to Invest in physical or digital gold?Backed by its tangible value, Gold often acts as a counterbalance to the risks associated with listed equities. The heightened geopolitical tensions over the last few months have led to Gold hitting record highs as investors are re-allocating their portfolios.
Additionally, the Federal Reserve’s decision to lower interest rates has made gold even more attractive, as it reduces the opportunity cost of holding non-yielding assets.
With Dhanteras approaching—a time when gold buying is traditionally seen to invite prosperity—we can expect demand to rise further. However, given the current high prices, it may be wise to approach gold investment cautiously.
Diversifying the investment, perhaps considering a smaller allocation to gold alongside other assets, could be beneficial.
What are your Expectations for Samvat 2081? Any top picks you have on your radarAs we enter Samvat 2081, there is a sense of sustained investor confidence in the market that the positive momentum from the previous year will continue. Samvat 2081 could be an interesting year for the markets, especially if economic recovery continues and corporate earnings show strength.
Samvat 2080 was a remarkable year for the Indian markets, with the Sensex and NIFTY rising over 24% and 27% respectively, underscoring the robust economic activity and optimism in the markets.
Additionally, D-Street saw a surge in public issues, with over 80 new listings raising more than ₹1,00,000 crore, and another 50 IPOs on the horizon.
With the Indian growth story unfolding and increasing participation from retail investors, the outlook for continued market growth appears promising.
What about sectors which – sectors are looking bullish till next Diwali?This year’s budget placed tremendous emphasis on the energy sector, with a particular spotlight on renewables as most companies are gearing up to hit their ESG targets.
Over the past year, companies in this sector have delivered impressive returns of ~80% further highlighting the appetite for renewable companies’ stocks amongst investors.
Overall, the combination of strong government backing, significant retail interest and robust performance creates a favorable outlook as we move toward the next Diwali
Any Sectors which you recommend investors to pare their positions?While the overall market outlook is expected to remain positive, investors should exercise caution and consider paring their positions in sectors in which companies face corporate governance challenges or lack robust fundamental support.
As the regulators are getting stricter, it is becoming essential for investors to conduct their own due diligence before investing and focus on sectors that demonstrate solid fundamentals and transparent governance practices.
Additionally, investors might consider paring positions in sectors that are facing headwinds or show signs of overvaluation.Big ticket IT Firms have declared their results for Q2. The BSE IT index has risen for more than 20% in the last 6 months. What is the sense you are getting from management commentary?The recent Q2 results from major IT firms like TCS, Infosys, HCL Tech, and Wipro indicate a positive outlook backed by the BSE IT Index rising over 20% in the last six months.
The positive rise in the BSE IT index suggests strong investor confidence, often bolstered by encouraging management commentary from major IT firms.
These companies have reported a median revenue growth of 6.4% year-on-year, along with operating profit and net profit growth of 6.8% and 7.8%, respectively.
Management commentary reflects confidence in sustained demand, particularly driven by advancements in AI, cloud computing, and cybersecurity.
Additionally, the BFSI divisions of these firms have shown signs of recovery, significantly contributing to their overall growth.
The outlook for both the IT and BFSI sectors remains optimistic, suggesting the potential for continued expansion in the coming months.
We are getting Rs 24,000 SIP every month – a new record from retail investors. Can retail money save us if global slowdown hits D- street because earnings will take a hit which are already showing signs of slowdown?The record inflow of ₹24,000 crore in SIPs each month from retail investors will play a vital role in supporting D-Street during a global slowdown.
Retail investment through SIPs can provide a stabilizing effect on the market, especially during periods of volatility. Regular inflows from SIPs can help maintain demand for equities, which can act as a cushion against sharp declines even if global conditions worsen.
While earnings might face some hurdles, this domestic support can help stabilize the market and guide it through challenging times.
Over the past year, DIIs have pumped more than ₹2,00,000 crore into the Indian markets, providing crucial backing at a time when FII’s have been paring their positions. This strong support from DIIs, backed by retail investors, has created a solid foundation for the market.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
