Focus on IT, Pharma, FMCG, and select PSU stocks; commodity bull run entering last leg now | INTERVIEW

The second wave of the coronavirus pandemic might not result in significant correction for Sensex and Nifty unless it lasts for a couple of months, said Amit Jain, Co-Founder and CEO, Ashika Wealth Advisors in an interview with Kshitij Bhargava of The Outlooker Online. Amit Jain, the market experts with nearly two decades of experience, believes IT, Pharma, and FMCG are some of the sectors where investors could focus on, expecting robust bottom-line numbers. Further, Jan believes that in the post-pandemic world India could become the manufacturing hub for the world. Here are the edited excerpts.

Q Stock markets are down from their all-time highs now, where are you spotting opportunities in this market?

The market is down 8% from its peak as of now and it may be a good opportunity to allocate 20% of money in equities but only in selected Sectors. In my view, IT, Pharma, FMCG, consumer durable will continue to have robust bottom-line numbers. On the contrarian view, we continue to be bullish on infrastructure, real estate and selected PSUs as we’ve said earlier.

Q Commodity cycle is the buzzword on Dalal Street, are you buying this argument that commodity stocks are entering a massive-bull run?

Almost six months back, we advised entry in commodity stocks and since then the NIFTY metal index is up almost 70% and individual stocks are up almost by 200%. In my view, this is the last leg of the bull run in commodities due to excessive money printing by the US Fed, which may last for another six to nine months. In my personal view, it is time to lighten the position in commodities in the short term.

Q India is witnessing the second wave of covid-19 cases. Although the vaccination drive is expected to pick up pace now, what implications, if any, do you see for stock markets if the second wave stretches longer?

Yes, You are right, the second wave is there, but in my view, it may be less fatal compared to the first wave, as now the world knows about the virus and is partially prepared to face it, unlike the first wave. If this wave stretches for a couple of months, then the market may have an excuse for a further significant correction. 

Q India has undertaken serious reforms during the last year and the economic outlook seems strong; what sectors do you believe are the best bet on India’s growth story ahead?

Yes, India took appropriate steps to boost the Economy during the Covid-19 pandemic, which has laid the foundation for a much stronger Indian Economy by 2030. In the post-Covid-19 era when the world is talking about “Social distancing” from China, all those sectors will be beneficiary in India where currently China dominates the World. In my view “India” may be the new manufacturing hub of the World by 2030, if the current pace of reforms continues. Indian may be a leading IT and Pharma exporter for the World Economy by 2035. The world has no alternative to India, as this is the only economy in the world that has both democratic and demographic dividend for the next fifteen years. This duo combination is rare in the world, hence the entire World Capital whether it is FDI or FPI, will chase India. Recently India has touched a new benchmark of $500 billion cumulative FDI investment, which reflects the commitment of Global Capital to India.

Q Bond yields are rising, does any further rise in yields pose a threat to FPIs pulling money away from the domestic market in large quantities?

Yes, US bonds yield has risen due to inflation fear from 0.51% in August 2020 to 1.71 % as on date which is 300% higher than August 2020 lows, however, it is still lower than 2.2% which it touched in the Dec 2008 post-Lehman Brother crash. In my view in the short term,  it may go back to 2.1%, however, in the long term, it will hover around 1.2 % to 1.8%. If this yield crosses 2% sustainably in the medium term, only then we have fear of FPI pulling out significantly from Indian Markets.

(The stock recommendations in this story are by the respective research and brokerage firms. The Outlooker Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)