Divam Sharma is the Founder of Green Portfolio
Since the lows hit in June, the markets have seen a sustainable recovery and, given the domestic demand and insignificant recession risk for India, there’s no indication of the market breaking the lows, believes Divam Sharma of Green Portfolio.
Until markets gain clarity on the terminal Fed interest rates and the US mid-term elections, consolidation is likely to continue, he says.
Seasoned for over 13 years in investment management in stock markets, Divam says Green Portfolio is extremely selective when it comes to banking and financial services sector. “We do not maintain a super bullish outlook on this space,” he shares in an interview with Moneycontrol. Excerpts from the discussion:
Do you think the RBI will restrict repo rate to 6 percent and take a pause?
After the latest Fed meeting and associated growth worries, key commodity prices have halved from their peak. Inflation prints in the US and EU are running at 400 percent above their target, whereas in India the divergence is only 16 percent above our upper band, and this gives the RBI room to maintain its focus on real growth and keep rates relatively capped.
Hence, we expect rates to settle right below the 6 percent mark in the medium term.
Also read – Building institutions such as GST Council takes time and patience: Nirmala Sitharaman
Are you taking position in real estate space or ancillary companies?
We have seen real estate prices rising over the last few quarters. In selected geographies, the rise in prices has surpassed 50 percent. Property registrations in key cities like Mumbai have seen continued momentum.
With new innovative property investment options coming mainstream – like fractional investing, it would bring more liquidity.
We believe that real estate will continue to do well as commodity prices fall, and the Indian economy surpasses ranks. Associated sectors like tiles, pipes, water tanks, and paints are posed to do well.
Do you think the market can break June lows in the coming weeks?
Since the June lows, the markets have seen a sustainable recovery, and given the domestic demand and insignificant recession risk for India, we do not see the market breaking that level.
Also read – Moneycontrol Market Sentiment Survey | Fund managers see up to 10% downside in remainder of FY23
Until markets gain clarity on the terminal Fed interest rates and the US mid-term elections, markets can consolidate. By quarter four of this financial year, we expect markets to gain some clarity on the mentioned factors before making the next leg higher.
Do you think there would be less activity in primary market considering the subdued secondary market environment?
Primary markets will take a breather and fall into the background until the next financial year. Several listing plans that were approved and given the green light will lapse and their debut would be postponed. Major start-up space players like Boat and OYO are considering Q4 for their IPOs.
However, the listing of Sterlite power and Pharmeasy which seemed promising during their filing day, now peers into the gloom and unlisted markets reflect this wisely.
Do you think the making of small-case portfolios with different themes or sectors is really a great help for retail investors?
The rise in equity market awareness has been reflected in the surge in demat accounts and retail participation numbers. Besides the traditional investment vehicles, investors are looking for theme-based or sector-specific exposures.
With the several styles of smallcase available, investors are not only able to select their factor exposure but have the same aligned to their risk profile. Personally, even during unfavourable markets, we have seen momentous traction with our Dividend yield and MNC-oriented smallcases.
Are you bullish on the banking and financial services space?
Several key parameters like credit growth, NPA’s and net interest margins have seen favourable developments. Private Capex growth along with PLI and logistics policy will further aid credit growth. Other factors like rupee-denominated trade and improved tech adaptability will support growth in this sector. We are being extremely selective in this sector, and do not maintain a super bullish outlook.
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