Diwali special investment ideas and market strategy

With regards to equity markets, there are three major factors which drives it – fundamentals, both macro and corporate, liquidity flow towards the equity market and equity valuations. In terms of fundamentals and valuations, India is better placed then most major economies. The domestic flow towards the equity market is also supportive of a buoyant equity market. However, the global risks and the consequent foreign portfolio outflow from Indian equity market.

Looking at the current economic scenario, I believe that the current investment outlook should be strategic as opposed to product driven. One should assess at the investment objective and risk associated to the investment vehicle. There has never been such a thing as ‘Right’ time to invest.

While investing, it is the tenor or the duration of the invested portfolio that counts as opposed to the timing of the markets. Psychologically, there’s this gravitational pull around the markets, where people tend to sell when the markets are really low and then wait for the right time to invest back in, by which time the markets tend to bounce back and they miss the rally.

At this current juncture, I believe that investors should look at stock specific opportunities available across market capitalization and investors should stick to high quality companies with good earnings visibility irrespective if it from mid and small caps. With improving consumer sentiments; easing raw materials prices and green shots of economic recovery visible – we except top line earnings growth to likely be in higher double digits. Banking & Financials / Autos and Industrial Goods are expected to perform really well in Q2 FY-23.

Strong credit growth which is at decadal high of ~ 16 percent will boost the second quarter earnings for banking sector and we except asset quality to improve further due to reduction in fresh slippages. We except NII and loan growth for all major banks to be quite strong and deliver a high teen growth on year on year basis. We except BFSI sector to do really well for the next 3 to 5 years due to India’s promising economic growth outlook and under penetration of financial services in the country.

From a domestic perspective, we don’t see substantial movement from current levels given various global headwinds like global inflationary environment, geopolitical issues, and aggressive monetary policy tightening by most major central banks. We except Nifty to range bound during Diwali.

We expect the Indian equities to bounce back given the resilient economy and currency. We are witnessing consumption revival and hoping the same to continue to the current festive season which will give further boost to domestic consumption oriented sectors.