Markets are too dynamic and adjust to the news and developments on an ongoing basis, so there is no point trying to time it

Coronavirus pandemic has led to a change in consumer behaviour, which is expected to bring in new market leaders. In the past two months, BSE Sensex and Nifty have marched to reclaim their crucial levels of 34,000 and 10,000, respectively. Hemang Jani, Head Equity Strategist – Broking & Distribution at Motilal Oswal Financial Services in an interview with Surbhi Jain of Financial Express Online, explains that during any event such as COVID-19 pandemic, initially there is a knee jerk reaction by investors, but once stabilisation hits the markets, people starts investing in the equities. Jani expects post coronavirus, new leaders will emerge and take charge of the next bull run in the share market. Here are the edited excerpts.

1. Which sector do you think will be the leader of the next bull run?

Historically it’s said that every bull market has new leaders. Our sense is that post-Covid 19 pandemic, there will be a change in consumer behaviour, which could bring new leaders in the market. Three themes on top of the mind are (1) Digital / Telecom (cos like Reliance Inds and Bharti) (2) Rural Play (Autos – 2 Wheelers, Tractors, Agro chem & Fertilizers, Consumer companies (3) Pharma & Healthcare (Sun Pharma, Lupin, Aurobindo Pharma, Dr Lal’s Pathlab).

2. Amid geopolitical tensions, ease in lockdown, hopes of economic recovery, is it a right time to enter into the markets?

Markets are too dynamic and adjust to the news and developments on an ongoing basis, so there is no point trying to time it. Given the intensified volatility in markets, it makes sense to have some liquidity on the sidelines to take advantage of any correction in the near term.

3. The coronavirus crisis dragged down the global as well as domestic share market. What are your top stock picks which can offer decent returns in near to medium term?

Our Preferred Picks are Bharti Airtel, Sun Pharma, HDFC Bank, HDFC Life, M&M, Coromandel Fertilizers, Bajaj- Auto, Ultratech Cement, and L&T Infotech.

4. Dotcom tech bubble burst in 2000 sunk BSE Sensex over 55% from its peak. How have been retail investors’ trading behaviour so far during COVID-19 pandemic?

Typically there is an initial knee jerk reaction by the investors to such an event and once things stabilize, there is comfort and the new money starts flowing in. This time we have seen more investors coming into the markets and volumes in the equity market have gone up dramatically in the past 2 months. Investors have also been reshuffling portfolios during these times getting rid of low-quality companies.

5. With Sensex above 34k, Nifty over 10k, where do you see the markets are headed from here?

Overall bias for both Sensex and Nifty is positive over the next 12-24 months. There may be short term volatility due to uncertainty around COVID-19 numbers post Unlock 1.0, resumption of economic activity and change in consumer behaviour.