In an interview with ETMarkets, Menon said, “The current market dynamics are favorable for gold due to several factors including rising geopolitical tensions, falling interest rates, slowing global economic growth and strong demand from central banks.”
Although it has turned out to be a volatile October, Nifty appears to be finding good support around 24500-25000 levels. What do you think about the market?
Due to poor domestic performance and migration of FII funds to other emerging markets, the market is currently in a consolidation phase.
The Nifty index has temporary support, but continued stability will depend on the overall results of the second quarter and signs of recovery in demand and profitability in the third quarter.
In the short to medium term, the market is expected to remain range-bound, with potential fluctuations limited to approximately ±5%. We saw the biggest IPOs on D-Street this month. History shows that most high-value IPOs with issue size of Rs 10,000 cr and above fail to deliver. What is your view?
We maintain a positive long-term view on Hyundai Motor Company. The stock is quite expensive, limiting any near-term upside that could impact retail demand. However, because the situation has improved significantly, it is inaccurate to compare this IPO to past large-scale IPOs and subsequent market consolidation. India now has a $5 trillion stock market, and demand for domestic stocks from both foreign and domestic investors. has increased significantly.
What do you think about gold? The yellow metal is trading near all-time highs and we are also approaching Dhanteras. Is it time to invest in physical or digital gold?
Current market dynamics are favorable for gold due to several factors, including rising geopolitical tensions, falling interest rates, slowing global economic growth, and strong demand from central banks.
However, the strength of the US dollar may put pressure on prices in the near term. Long-term investors are encouraged to continue investing in physical or digital gold with the opportunity to increase their holdings while prices decline.
What do you think about Samvat 2081? Are there any top picks on your radar?
The initial phase of Samvat 2081 is expected to be volatile due to slowing corporate performance and narrowing premium valuation in India.
However, after the initial period of consolidation, lower interest rates and lower global inflation are expected to improve markets, boosting corporate earnings in the future.
The impact of consolidation is likely to be curbed by strong domestic inflows, which will help absorb global market volatility. In this environment, we expect domestic demand-driven sectors, especially consumer stocks, to outperform the overall market.
What about the sector? Which sectors are likely to remain strong by next Diwali?
We expect domestic stocks to remain strong amid the global economic slowdown. Promising sectors include consumption, FMCG, infrastructure, next-generation enterprises, manufacturing, chemicals, etc.
This outlook is based on expectations of a stable domestic economy, expected decline in domestic inflation, and the positive impact of the China Plus One Strategy (PLI Plan) on business growth.
Additionally, we are bullish on large private sector banks and NBFCs, which are currently trading below their long-term average valuations and expectations of an RBI rate cut in 2025.
Are there any sectors where you would recommend investors reduce their positions?
Sectors such as capital goods, real estate, IT, pharmaceuticals and automotive are at higher risk of underperformance in the short and medium term.
This is linked to premium valuations, a slowing global economy and pent-up demand domestically. Export-based stocks are also vulnerable in the near term.
Large IT companies announced their second quarter results. The BSE IT index has risen more than 20% in the past six months. How did the management commentary make you feel?
The BSE IT index performed better due to slightly better second quarter results than the first quarter and a slight upward revision in margin forecasts.
Management continues to give a positive outlook due to the increase in AI-based trading and improvement in the BFSI sector, especially in the US. AI is expected to be a driver in the long term.
The BFSI sector is expected to improve in 2025 in anticipation of interest rate cuts by the Federal Reserve. The current IT industry valuation is high, exceeding the long-term average, and the profit growth rate is low. Currently, we maintain a neutral view with a focus on selective stock selection.
We are getting Rs 24000 Cr SIP every month. This is a new record from retail investors. Can retail money save us if a global recession hits D-Street, as revenues that are already showing signs of slowing will take a hit?
In fact, significant domestic inflows are helping to dampen the downward momentum by cushioning the impact of FII selling.
Although FII net outflows have increased and may continue in the near future, DIIs are expected to remain strong buyers.
This trend is likely to continue as significant inflows continue and MFs have high cash and non-equity positions.
(Disclaimer: Expert recommendations, suggestions, views and opinions are their own and do not represent the views of The Economic Times.)
