BSE Sensex and NSE Nifty 50 have virtually doubled from respective March lows. Earlier this week, headline indices rose to all-time highs, taking the market capitalisation of the BSE-listed corporations to Rs 199 lakh crore. Whilst indices commerce close to file highs, Kunal Sanghavi, CFO, HDFC Securities, instructed Monetary Categorical On-line that 2021 will not be a repeat of the 2020 rally. In line with him, 2021 will likely be much more totally different than 2020, as there will likely be no comparable type of rise from lows or the V-shaped restoration in 2021. Furthermore, even short-term volatility can’t be dominated out on this calendar 12 months. Nonetheless, there are a couple of sectors that will supply good returns from a long-term funding horizon, Kunal Sanghavi stated.
One may even see numerous sideways motion and witness totally different sorts of sectors shifting; however the identification of the proper sectors will likely be very essential at this level of time, he stated. On this new 12 months, markets may even see sure main sectors akin to expertise, the place India may develop into a surplus exporter to the remainder of the globe. Amongst different sectors, Sanghavi expects prescription drugs, infrastructure, logistics and e-commerce to outperform. “It isn’t about whether or not the markets will likely be good or dangerous. It’s extra about whether or not one is in the proper sectors or not,” he stated.
The funding in proper sectors will certainly respect from the present ranges because the 12 months 2020 fashioned an excellent base. As short-term corrections within the center are very a lot on the playing cards, one must have cautious strategy from a short-term perspective.
2020 vs 2008: What modified, what didn’t
Final 12 months 2020 was a reproduction of what occurred in 2008, Sanghavi stated, drawing parallels between the 2 main drawdown intervals. Each occasions, markets witnessed large corrections and panic was at its peak. Throughout such occasions, establishments globally invested their surplus money. “Whereas taking a look at sure liquidity parameters, throughout 2008-09, we noticed liquidity was at its highest in 2009 after which it bought stabilised. Now, 2018-2020 has been a interval of slack and now we’re seeing a rebound from an total perspective,” he stated.
Sanghavi suggested that one should issue within the improve within the total GDP, as India strikes towards the Prime Minister’s dream of attaining a $5 trillion greenback financial system. India has already crossed the $2.7 greenback financial system, to this point. “The imaginative and prescient which we try to realize is resulting in numerous surplus cash within the ecosystem,” he added.
From a long-term perspective, Sanghavi believes that that is the proper time for the traders to enter the inventory markets as international liquidity has been at its highest. After rallying to the all-time highs, fairness benchmarks succumbed to profit-booking. From the file excessive hit yesterday, BSE Sensex has tumbled 1,045 factors or 2 per cent on Friday, whereas the broader Nifty index plunged to 14,453, falling over 300 factors.