Indian equity market is looking uncertain amid the ongoing festive season. At the same time, investors are also in dilemma whether to stay in cash or keep investing on every fall, considering a couple of risks in the form of depreciating rupee, hike in interest rates amid soaring inflation and geopolitical crisis between Russia and Ukraine. In an interaction with Business Today (BT), Deepak Shenoy, founder, Capitalmind, a smallcase manager, shared his views on the market prospects together with his investment advice that may help investors to create a solid portfolio. Edited excerpts:
BT: BSE Sensex and NSE Nifty stood almost flat on a year-to-date (YTD) basis so far. How do you see the trend going ahead on Dalal Street?
Deepak Shenoy: There is not much momentum in the market and even stocks that show signs of momentum see a reversal quickly. This is not a trending market and therefore markets are rangebound. We expect that in the next year, there will be a good period for momentum, and it may start more towards the end of this year or early next year.
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BT: Where do you see the benchmark equity indices by next Diwali?
Shenoy: No idea, as we don’t like to predict. We believe that five Diwalis later, Indian markets should be up by over 12 per cent a year, given how much the nominal economy should grow.
BT: Which factors will drive market going ahead?
Shenoy: External factors include the US tightening, the European energy crisis and Russia-Ukraine war. Internal includes how much depreciation of Indian rupee against dollar hurts inflation, our liquidity situation in terms of foreign institutional investors (FIIs) exiting and our ability to grow at 4-6 per cent in real terms this coming year.
BT: How can investors create a portfolio of Rs 10 lakh this festive season?
Shenoy: They can choose appropriate mutual funds or index funds if they want to be totally hands-off. If they understand markets and stocks, they could choose a group of stocks such as a smallcase that invests with a consistent strategy.
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BT: Which sectors will outperform going ahead and why?
Shenoy: In general, the performance of sectors is not predictable in the year ahead, but we think specifically large banks, large cap IT, manufacturing, defence and retail stocks should do well.
BT: Can you highlight few risks which may drag the market down?
Shenoy: An escalation of the Ukraine Russia war and a deep recession in the west will be the biggest risk in terms of the threat of liquidity leaving.
BT: What are the mistakes investors should avoid in the volatile market?
Shenoy: Don’t get lured into markets on the back of high promises. Markets can easily lose money and will do so every few years. Be aware that in markets, there are no guarantees and losses are part of the journey. A larger set of mistakes are overloading on a stock, buying stocks you don’t understand (do your own research), booking profits too early (ride your winners!) and responding to too much news or information (don’t get swayed by rumours/news).
