As attractive as PSU banks may seem, we would recommend sticking to private banks i.e. if one wants to invest in the banking space.
We recommend sticking to private banks i.e. if one wants to invest in the banking space. We remain positive on the agri/ rural plays, consumption themes, housing theme as well as the infrastructure space, Nitasha Shankar, Sr. Vice President and Head of Research at YES Securities (I) Ltd., said in an interview to Moneycontrol's Kshitij Anand.
Q) The Nifty50 index slipped below its crucial support levels this week fuelling concerns of a bear phase in the market which was hitting record highs just a month back. What is your call on markets?
A) The selloff by foreign investors (FIIs) that we have witnessed in the recent past is expected to be offset by the liquidity flows into equities from the domestic household savings. We believe that as long as this remains strong, volatility should remain curbed to a large extent.
However, given the high expectations from the earnings – as gauged by the higher multiples that the markets are garnering – as well as the many state elections lined up this year; we expect 2018 to be fairly volatile.
The year will not be anything like 2017, where we saw a run up across the board. A stock specific approach is the way to go.
Q) The US Fed is scheduled to hold its 2-day policy meet later in the month. Do you see that uncertainty weighing on the markets?
A) Yes, in the short term, global cues and their impact on liquidity will make Indian market volatile. However, given the strong long-term fundamentals of India, markets should bounce back quickly.
Q) What should be the right strategy for investors right now – sit on cash and wait for a dip or deploy cash incrementally throughout the year?
A) Deploying cash incrementally should be the way to go, especially considering this year the market will remain fairly volatile.
Q) What should be the ideal strategy for investors in terms of sectors? Do you think PSU banks are a good buy at current levels? What are the sector which you think are likely to show momentum in the year 2018?
A) A good way to have sector-wise allocation would be to mimic the benchmark indices – such as the Nifty 50 or the BSE – 100 or 200 indices.
As attractive as PSU banks may seem, we would recommend sticking to private banks i.e. if one wants to invest in the banking space.
We remain positive on the agri/ rural plays, consumption themes, housing theme as well as the infrastructure space.
Q) What is your advise to investors who want to put Rs10 Lakh into markets? He is in the age bracket of 35-40 years. He/she is looking at forming a portfolio with direct equities, MFs, a part of fixed income as well?
A) A lot more information would be required (such as already existing investment and savings profile, the lifestyle of the investor, the risk appetite, his knowledge on equity investing) to answer such a question.
Let us go with the assumption that the candidate mentioned above has no savings, we would recommend a staggered approach towards investing in equities rather than investing all the amount in one go.
By the end of one year, the investor should have at least 30-40% of his money in fixed income and the balance split between MFs and equities (direct).
Q) What will happen in the banking space given the fact that the cost of borrowing is inching higher. The RBI might keep rates on hold in its next policy but may raise rates in 2018?
A) While banks will look to pass on the prices, keeping a gauge on the asset quality will be critical.
