Manish Sonthalia believes the bull run in Indian equities will continue moving forward and market performance will get stronger moving forward.
Manish Sonthalia of Motilal Oswal AMC
Foreign institutional investors will continue to buy Indian stocks and support the markets in 2023 based on strong earnings and upbeat outlook for FY’23 and FY’24, said Manish Sonthalia, head equities-PMS at Motilal Oswal Asset Management Company.
“India is one of the shining stars in the emerging market space and FIIs have turned buyers,” Sonthalia said in an interview with CNBC-TV18. “The buying (of stocks) is only going to accelerate into the next year.”
He believes the bull run in Indian equities will continue moving forward and market performance will get stronger moving forward.
According to Bloomberg-compiled data, global funds bought around a net $ 3 billion of India stocks in November. Holdings of foreign investors in long index futures rose by about six times from their September lows, while short bets dropped 76 percent over the same period.
Also read: Foreign investor bets show Indian stocks rally has more legs
He also expects the bull run to continue in small cap and midcap stocks given their strong fundamentals and higher returns. Ideally, small cap and midcap stocks traded at a discount to large caps but the discount has reduced over the last two years, he added.
“Typically, small and mid caps would trade at some sort of a discount to large caps … that discount has narrowed significantly over the last two years,” he said. “In the last one year, we have seen the small caps and mid caps lead the rally from the front … leadership mantle is now being taken by the large caps.”
According to Santholia, India has been one of the strongest economies in the world and depreciation in the dollar index is proving to be a positive for emerging markets, including India.
The US currency traded near a 16-week low against a basket of major currencies at 104.84 on December 2 as data showing increased US consumer spending in October firmed investor hopes that the peak in interest rates was on the horizon.
Talking about bank and technology stocks, Santholia feels that there has been pressure on margins because of supply chain disruptions and increasing commodity costs. However, he mentioned that inflation will cool down in the near term leading to softening of raw material costs, which will aid various Indian sectors.
Also read: Hot Stocks | Persistent Systems, GMR Infrastructure, UltraTech Cement can give 11-19% return in short-term; here’s why
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