Nishit Master of Axis Securities PMS
Axis Securities PMS continues to like the banking space, especially banks with high CASA, and also likes industries, including defence companies, which are sitting on record high-order books, Nishit Master of Axis Securities PMS says in an interview to Moneycontrol.
The portfolio manager believes Indian markets will remain rangebound in December 2022, but expects Nifty50 at 20,400 by December 2023.
But, more than Nifty50, Master with more than 16 years of experience in portfolio management believes that the broader markets have a high possibility of doing well in December after sustained underperformance.
Do you think the Nifty (fundamentally) will find it easy to surpass the 19,000 mark where the maximum open interest built up in December? Also, are you comfortable with market valuations considering the current environment?
We believe Indian markets will remain rangebound in December. More than Nifty50, we believe that the broader markets have a high possibility of doing well in December after sustained underperformance. We believe in December, smallcaps and midcaps can perform better than large caps.
Is it a better time to start accumulating large consumer names, which are sideways?
One can start accumulating large consumer names slowly as raw material pressures have started easing, which demands recovery, especially in rural markets, which might still take some time.
Do you think the time has come to start betting on new-age companies, as they are far below their issue prices?
One needs to be very selective in investing in new-age companies even after the recent correction in their prices. We recommend investing in companies having a focused roadmap to start generating free cash flows shortly as the tap of easy money for these new-age companies has dried up.
Companies with a business model in place generating free cash flow without compromising much on business growth would attract investor interest.
Do you think the central banks will have to consider more rate hikes next year?
We expect the rate hike cycle globally to continue at least for the first half of next year till either the US or Europe goes into a deep recession or if inflation falls drastically. Though we expect the rate hike cycle in 1HCY23 to continue, it’s important to note that the intensity of rate hikes will be milder than we have witnessed in 2022.
Do you see any possibility of Indian markets falling below June 2022 lows in 2023? Also, can the recession be the reason?
We believe Indian markets will continue to do well in 2023 as India remains the fastest-growing major economy of the world in an environment where growth is slowing everywhere else, including in the US, Europe, and China.
Our December 2023 Nifty50 target is 20,400. For Indian markets to correct below June 2022 lows, one would need to see a deep recession in the US, China, and Europe, having an impact on Indian growth prospects, which is not our base case currently.
Your thoughts on speciality chemical companies?
Market commentary by consumers of specialty chemical companies globally has not been very encouraging both from US and European markets. We believe at least for a couple of quarters, speciality chemical companies might face pressure on the export demand side, which will lead to lower-than-expected revenues for the companies. Thus, we would avoid this space in the short term.
What are the themes that you want to suggest for 2023?
We continue to like the banking space, especially banks with high CASA. We like industries, including defense companies, which are sitting on record high-order books.
Another sector that can do well in 2023 after a weak 2022 is the cement sector, where the margins seem to have bottomed out.
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