Lockdown could hit revenues of small & medium enterprises in upcoming quarters: Mohit Nigam of Hem Securities

A) Yes, the Covid situation in India has deteriorated significantly since the last 45 days. There is a slowdown in a lot of economic activities and movements as a consequence of the rising restrictions.

We believe that this will result in short-term pressure in the markets. We are already 1000 points down on the Nifty from the recent high due to the rise in cases and we can correct/consolidate for some more time till we see some fresh trigger on the positive front which most likely could be the peak of this wave along with a rapid increase in vaccination drive.

However, the intensity with which the market shattered last year will not be repeated most likely and any significant corrections can be seen as a buying opportunity to get into resilient and solid companies.

High liquidity is likely to continue through 2023 and the local vaccination drive can quickly change the sentiments.

A) I think many firms, especially the top & middle level ones have by now figured out a sustainable way to work in the current environment.

Our Nifty 50 earnings are almost back to the last financial year showing an initial rebound. There is a lot of support provided through monetary & fiscal policies. RBI has estimated a 10.5% growth in GDP.

The impact hence, will not be very severe for the bigger firms (with firms having factories in containment zones being an exception) but small & medium enterprises may face certain issues and possibly reduced revenues.

This is an evolving issue and things can slip quickly out of hands which we have seen in the recent weeks. There will be a more severe sector-specific impact due to the second wave.

Struggling frontline sectors of aviation, dining, hospitality, multiplexes etc. can bear the brunt of a reduced or negligible demand. Hence, there will be a more sector-based impact.

A) First, sectors that have shown resilience & innovative technologies like IT and private banking. Secondly, sectors that have their long-term growth story intact due to different reasons ranging from a shift away from China, introduction of PLI schemes or other manufacturing incentives, innovations in technology space etc.

Examples will be domestic equipment manufacturing, capital goods, chemicals, or even some emerging and unique players in the digital space.

A) Fine dining restaurants, multiplexes, hospitality, aviation have the highest odds of negative impact due to demand-side constraints.

If the lockdown restriction increases further resulting in a loss in income and movement, then we can see a fall or postponement in demand in the discretionary consumer & automobile space as well.

A) Yes, significant dips in a volatile market provide entry opportunities because the market turns around pretty quickly before anyone can anticipate and does not give a chance to the people looking for bottom fishing.

We have seen at least four instances where markets rebounded more than 100-150% in 1-2.5 years after a significant dip at a lightning-fast speed.

Hence, if we believe in the growth story & future of India, we should be able to take bolder decisions on dips to make higher returns in the markets and the overall trajectory of Indian markets is higher since it is one of the fastest-growing countries in the world.

Technically, markets have to date given a correction of 7-8% which is negligible compared to the 100% returns it gave from last March. Hence, there is a little bit of scope for a considerable correction in the markets and the current situation can instigate some players including FIIs to book profits.

For Nifty 50, 14200 is immediate support from where markets have jumped up 2-3 times recently, if anytime soon the market closes below these levels, we might see a fall till 13500. However, we are not seeing a massive correction like last year.

A) Rupee might face some short-term pressure due to a possible exodus from debt and equity markets. US yields have jumped by more than 120 bps from last year's low and the differential between the Indian and US yields have shrunk due to which they might not be that attractive on the debt side.

On the equity front, we have seen a record inflow of more than $35 billion in the last fiscal. Hence, the resurgence in COVID cases can trigger a profit-booking in the Indian markets. Rise in cases and equity sell-off can put pressure on the rupee.

The crucial level is 75.50 and it should respect the levels. A breach of 75.50 will create a fresh high, in spite of RBI being there with a record forex buffer.

A) We are continuously exploring new technology and gaming options. It is an exciting space with a lot of new players and unique opportunities.

However, we would like to wait for a quarter to get more conviction about their results and numbers.

On the jewellery and travel front, currently, we are not looking to add any positions due to a direct negative impact on these sectors and we might want to wait for some ease in the current atmosphere before plunging into that space.