As many as 54 percent of the respondents said that there is more pain left in the markets before we could see a sustained recovery on D-Street while the rest 46 percent feel that most of the negatives are priced in and the only direction the market is likely to follow is upwards.
The S&P BSE Sensex plunged more than 7 percent from its all-time high of 36,443 recorded in the month of January but the pain in the market may not be over yet at least for the financial year ending 2018, a Moneycontrol poll of 15 analysts and money managers showed.
Even though the pain may not be over but this is the perfect time to get into quality stocks which are now available at deep discounts because the pullback rally will be equally swift which could take the index towards Mount 36K towards December-end.
As many as 54 percent of the respondents said that there is more pain left in the markets before we could see a sustained recovery on D-Street while the rest 46 percent feel that most of the negatives are priced in and the only direction the market is likely to follow is upwards.
“Given where we stand on valuations and elevated expectations for FY19E, we wouldn’t say we have seen enough pain yet. In contrast with the prevailing sentiment, Nifty’s F3Q earnings were poor (9-10% earnings growth, ex-financials), despite coping a demonetization-hit quarter from last year,” Piyush Sharma, Co-founder & Portfolio Manager, Metis Capital Management Ltd told Moneycontrol.
Apart from domestic headwinds, we could see some correction globally as well which could also play a crucial rose as to where equity markets are headed in the year 2018. Investors should forget about a blockbuster year, one we saw in 2017, and see 2018 a year of moderate returns.
Considering 2019 is an election year, analysts across the globe are watching India on the policy front. Any rollback on plans could spell trouble for Indian markets because that would lead to loss of confidence.
“We will be watching that very carefully because the degree to which the reforms that Prime Minister (PM) Narendra Modi is implementing and has implemented, if there is any pullback, any step backwards, that would be a bad news. I don’t think that will happen,” Mark Mobius, Former Executive Chairman of Templeton Emerging Markets Group said in an interview with CNBC-TV18.
“I believe that the benefits that the reforms already implemented, have had on the society as a whole, will be reinforcing the need for more such reforms. We think India is now at the take-off stage and will probably surpass China in terms of growth going forward,” he said.
But, it will be a good year for the economy and India Inc. Most analysts feel that the recovery cycle has already started the way December quarter results came out. Although December quarter earnings were a mixed bag, the fact that they are trending higher is encouraging with profit growth of 9 percent compare to last quarter’s 6 percent.
As many as 77 percent of the poll respondents feel that earnings have bounced back while the rest 23 percent feel that it might take a couple of more quarters.
If earnings start to improve it would have a positive impact on equities as well which should lead to some recovery in markets as well.
More than 70 percent of the respondents feel that the S&P BSE Sensex is on track to reclaim Mount 36K while 14 percent feel that it could hover in the range of 34000 to 36000. The rest 14 percent feel that it could slip below 34K towards the end of the year.
For the Nifty, as many as 53 percent of the poll respondents feel that Nifty is on track to hit Mount 12K while 34 percent of them feel that it could hover in the range of 10,000 to 12,000.
The rest 13 percent are of the view that the worst is yet to come and the index could well slip below 10,000 towards the end of the year.
"We at Sharekhan don’t have short term target for benchmark indices. We believe that earnings will pick up in FY2019 which could support market going ahead, expectation on returns from market could sober down in FY2019 vis-a-vis FY2018 but it would be still possible to make double digit returns," Hemang Jani, Head - Advisory, Sharekhan told Moneycontrol.
But, this is the best time to pick stocks and investors should follow a bottom-up approach where they see an earnings recovery. As many as 71 percent of the respondents feel that it is a big opportunity for investors to create wealth over long term.
While 21 percent feel that investors could wait for some more dip before they start buying quality stocks while the rest 7 percent feel that it is better to book profits at current levels.
Poll Participants
Ajay Bodke, CEO & Chief Portfolio Manager PMS Prabhudas LilladherV K Sharma, Head – PCG & Capital Market Strategy, HDFC securities
Jimeet Modi, CEO & Founder at SAMCO Securities
Sanjeev Jain, Associate Vice-President of Ashika Stock Broking
Sumeet Bagadia Associate Director Choice Broking
Dinesh Rohira, Founder & CEO, 5nance.com
Vijay Singhania, founder-director, Trade Smart Online
Priyank Upadhyay, AVP - Research (Commodities), SSJ Finance & Securities.
AK Prabhakar, HoR, IDBI Capita
Jaikishan Parmar of Angel Broking
Mustafa Nadeem, CEO, Epic Research
Karvy Private Wealth
Nikhil Kamath, Co-Founder and Head of Trading, Zerodha
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
GEPL CapitalPhillipCapital
