DAILY VOICE | Most sectors expected to report healthy Q4, except travel tourism: Amit Jain of Ashika Wealth

Market Outlook

In his last interview to Moneycontrol in December, Amit Jain, co-founder and CEO of Ashika Wealth Advisors, predicted that foreign investors will return to Indian market post February. And that is evident in March data, which shows foreign investors (FIIs + FPIs) bought Indian equities worth over Rs 19,000 crore.

Prior to his entrepreneurship stint with Ashika Wealth, Amit Jain worked in the banking & financial services industry for eighteen years. In his last assignment, he was at Reliance Capital Group Company as Business Head for the India region.

Jain has a keen interest in mentoring new startups to scale their businesses. He has mentored startups from IIM, IIT, DTU, DU and other premium institutes in India.

In an interview to Moneycontrol’s Sunil Shankar Matkar, Jain said that they are bullish on Q4 earnings across sectors, except tourism, hotel & aviation industry. In my view, IT, pharma, FMCG, consumer durable will continue to have robust bottomline numbers, he added.

Edited excerpts:-

Q: Do you think the market can return to the levels of previous record high (12,400 seen in January 2020) in FY22?

In my view, it is very much possible. Any dip in market is a buying opportunity as post this pre-empted correction, Indian market will be in multi-decade bull run. On the upside, it may be challenging for Nifty to cross 18,000 in the medium term.

Q: Is the surge in US bond yields a bigger risk for India than the rising COVID-19 infections? What other risk factors should one monitor?

In my view, increasing number of COVID-19 cases in India is a much bigger threat to Indian market than the US bond yield. In 2021, Indian market may see both price correction & time correction before starting the next leg of bull run from current levels. If you remember in my 4th December interview with Moneycontrol, we pre-empted that FIIs will take fresh short position after February 2021, i.e. March onwards & now this is a reality, as in March Nifty is down almost 8 percent from its peak.

Q: What are your broad expectations from the March quarter earnings? Can you name the sectors which are expected to report strong and weak earnings?

We are bullish on Q4 earnings across all sectors, except tourism, hotel & aviation Industry. In my view, IT, Pharma, FMCG, consumer durable will continue to have robust bottomline numbers. On the contrarian view, we continue to be bullish on infrastructure, real estate and selected PSUs as mentioned on 10th November 2020 interview.

Q: FMCG sector was the underperformer with just 20 percent gains in FY21 against more than 50 percent rally in other sectoral indices. Do you think it is time to pick these stocks?

Yes, you are right. FMCG Sector underperformed from April 2020 till March 2021, as this sector is always perceived as defensive Sector. In the beginning of April 2020, Nifty was close to 8,000 & it was highly undervalued at PE close to 20, hence, since that day, smart money only chased growth sectors to generate quicker returns rather than chasing a defensive sector like FMCG. In my view, now this sector is trading at its long-term average, hence good to buy in stagger way for next six months.

Q: If the correction extends in the coming weeks, what should investors look for buying in terms of sectors and stocks?

If this correction aggravates from here, then every dip shall be buying opportunity in infrastructure, IT, specialty chemical, FMCG, telecom and selected PSUs. At this moment short-term investors may lighten their positions in selected private banks, aviation, tourism and luxury lifestyle stocks.

Q: After 30 IPOs in the financial year 2020-2021, do you expect more in the new financial year? Also will the government be able to meet its divestment target?

Yes, this IPO frenzy may continue in the short term as almost all IPOs are listing with big gains. However, from here-on, only IPOs with robust business model in growing sectors would sustain such filthy valuations. In my view, the government is committed for LIC IPO in FY22. However for two PSU banks, it may wait more for appropriate time to get fair valuation.

Q: What do you expect from the RBI in the upcoming policy meet?

It all depends how new COVID-19 cases turn out to be, if number of cases per day stay above 50,000, then we may continue to see lower rate of interest regime. In case we see inflation sustainably cross 6 percent mark, then we may have 50 basis point upside in FY22. There are higher chances that in the April meeting, RBI may revise GDP growth projection as 11 percent plus for FY 2021-22.

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