Atish Matlawala, Senior Analyst at SSJ Finance & Securities believes the market will remain bullish over the longer time frame due to various policy measures taken by the government. “But we need not rule out correction of 5-10 percent in the shorter term,” he said in an interview to Moneycontrol’s Sunil Shankar Matkar.
In the auto sector, he feels the chip shortage will impact the volumes in the festive season but over the longer term, chip issues will be resolved. Here are edited excerpts from the interview:
Q: Considering the expected economic & earnings growth, do you think the BSE Sensex and Nifty can double from current levels by 2025?
We can see considerable upside over the next four years but looking at expensive valuations, we do not believe it can become double by 2025 but of course we believe it can double by 2027.
Q: Have you spotted any themes which have to be part of portfolio from here on, and why?
We are positive on the Textiles and Chemical sector due to the world looking at alternatives to China which can benefit Indian companies.
Q: Finally, the government announced moratorium of four years on payment of adjusted gross revenue dues for cash-strapped telecom sector. How will this moratorium help the sector and do you think it can solve the problem of the sector? What should be done to solve the sector’s crisis?
Four-year moratorium on AGR dues offered by the Government will allow time for telecom companies to transform and better manage their cashflow in shorter term. This will definitely give a boost to the sector but they will have to make better use of their resources and avoid tariff wars to help the sector in the long run.
Q: Several experts expect the bullish trend to continue for atleast next couple of years to four years. Do you agree with their view and why?
We certainly agree and believe the market to remain bullish over the longer time frame due to various policy measures taken by the government but we need not rule out corrections of 5-10 percent in the shorter term.
Q: Metals sector was the biggest outperformer in FY22 so far with 44 percent gains. Do you think the rally can extend further in coming weeks or is it the time to be cautious on the segment?
Few days’ back the government increased the GST on metals from 5 percent to 18 percent. Increased GST will certainly have a negative impact on the performance of metal companies. We believe it’s time to be cautious on the sector.
Q: What is your view on the PLI scheme announced for the sector? Will the chip shortage issue be a spoiler for auto sector in current festive season? Is it the time to add these stocks to portfolio?
Production linked incentive (PLI) scheme for auto & auto component will help large as well as mid & small players to plan new expansion. It will also attract new players to take advantage of the opportunity created by the PLI scheme. Chip shortage will impact the volumes in the festive season but over the longer term we believe chip issues will be resolved. Investors can accumulate auto stocks like Tata motors, Ashok Leyland, etc with a medium to long term view.
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