Earnings in IT/Pharma/FMCG/Banks are better-than-expected, and due to fall in raw material, margins have improved.
Liquidity is the major driver for market and SIP flow has been stable and it would continue to be so in my view, but liquidity along with US-China tensions are biggest risks, said AK Prabhakar, Head of Research at IDBI Capital Markets & Securities in an interview to Moneycontrol's Sunil Shankar Matkar.
edited excerpts:
Q) Market has been rising gradually and have not shown sign of a major correction. Most experts feel the market is expensive now and could correct anytime? What are your thoughts and will the market hit 12,000 first before any major correction?
A) Market has and is surprising everyone, levels have become immaterial and predicting levels will be difficult also.
Q) Given the 51 percent rally in benchmark indices, should one still buy stocks or wait for correction?
A) This has been the shortest correction for a major event and buying stocks for 3-5 years as SIP would be better strategy.
Q) What is your reading on June quarter earnings and what are your expectations for the September quarter? Have you changed earnings estimates for FY21 and FY22?
A) Earnings for sectors such as IT, Pharma, FMCG and Banks have been better-than-expected, and due to fall in raw material, margins have improved. For FY21 & FY22 we have not made any major change.
Q) MFs outflow in equity funds in July was first in the last 52 months. Do you expect more outflow by MFs in coming months and what could be the reason behind it?
A) Liquidity is the major driver for market and SIP flow has been stable and it would continue to be so in my view.
Q) What is the biggest risk for equity markets globally?
A) US-China tension and liquidity are the biggest risks for markets right now.
Q) More than 50 percent of the rally has been led by top five stocks - RIL, Infosys, TCS, HDFC Bank and HDFC? Will they continue to be the drivers ?
A) Now, few other stocks can also participate. Bharti Airtel, Asian Paints, HUL, ITC along with pharma stocks can be viewed.
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