Nifty hits 19,500: Here’s a strategy to make money at record-high levels
In an interview with Business Today, Piyush Nagda, Director Private Wealth at Monarch Networth Capital, talks about expectations from the upcoming corporate results season
- Jul 6, 2023,
- Updated Jul 6, 2023 4:13 PM IST
The benchmark NSE Nifty50 index hit the psychologically important 19,500-mark for the first time intraday on July 6. However, the index closed just shy of that figure at 19,497.30, which represented a gain of 98.80 points, or 0.51 per. Now, all eyes are on the forthcoming quarterly results that will determine the trajectory of the market. IT majors Tata Consultancy Services and HCL Technologies will announce their results next week. Will the current momentum sustain? In an interaction with Business Today, Piyush Nagda, Director Private Wealth at Monarch Networth Capital, shared his insights on the domestic equity markets and upcoming quarterly results. Edited excerpts:
BT: How do you see markets valuations after the recent run up?
PN: Markets are at an all-time high and some pockets are expensive. But overall market is in a fair zone with one-year forward Nifty PE (price to earnings) close to its long term average. The consensus is that EPS (earnings per share) growth for next three years is expected to sustain at 15 per cent to 17 per cent CAGR growth substantially expanding the profit pool of India Inc.
Overall, the outlook remains optimistic backed by solid macros, softening oil and commodity prices, moderating inflation and robust fiscals. Any sharp correction should be used as an entry point by long term investors.
BT: How will the forthcoming results drive equity markets?
PN: To an extent, the results have been factored in by the market. The current rally is driven by foreign portfolio investment (FPI) flows, which are expected to continue as India is in a sweet spot versus global peers on the back of solid macro and improving micro environment.
BT: What do you expect from the Q1 results season? Which sectors do you think will surprise the markets and why?
PN: We expect Q1 results to be good on a year-on-year (YoY) basis, but flat or marginally positive on a quarter-on-quarter (QoQ) basis. After a long underperformance in tech stocks, a stable to marginally improved earnings guidance could spring a surprise. The US tech giants have already shown recovery in Q1 and the buzz around AI is hinting at unfolding of a megatrend. We are keenly watching the space.
The second half looks more interesting and entire hospitality sector and select consumption themes will get a fillip from the cricket world cup, festive and wedding season. The capital goods sector will continue the growth momentum on the back of election-led project announcements.
BT: What would be the right asset allocation strategy for now?
PN: We remain overweight on equity with a bias towards high quality mid-cap ideas. Investors approaching their financial goals can look at booking profit. Otherwise, long-term investors should stay invested with their core portfolio allocations without being deterred by all-time high markets.
Staggered investing in equities is the best way to ride the volatility and sector rotation. HNI clients can look at managed strategies like PMS and AIFs. For mass-affluent and retail investors, mutual fund SIP is the best way to create wealth and avoid timing the markets.
On the fixed income side, we prefer high quality accrual funds with 3–5 years average maturity. HNI clients with high-risk appetite can look at tactical allocation to private credit strategies through the AIF route to enhance portfolio yield.
Building an emergency fund equal to 6 to 12 months of household expenses and having adequate life and health insurance cover should be a priority for all investors.
Also read: Hindustan Zinc shares jump 9% today amid heavy volumes; here's why
Also read: Adani Green shares rise 3% after board approves Rs 12,300 crore fundraising plans
The benchmark NSE Nifty50 index hit the psychologically important 19,500-mark for the first time intraday on July 6. However, the index closed just shy of that figure at 19,497.30, which represented a gain of 98.80 points, or 0.51 per. Now, all eyes are on the forthcoming quarterly results that will determine the trajectory of the market. IT majors Tata Consultancy Services and HCL Technologies will announce their results next week. Will the current momentum sustain? In an interaction with Business Today, Piyush Nagda, Director Private Wealth at Monarch Networth Capital, shared his insights on the domestic equity markets and upcoming quarterly results. Edited excerpts:
BT: How do you see markets valuations after the recent run up?
PN: Markets are at an all-time high and some pockets are expensive. But overall market is in a fair zone with one-year forward Nifty PE (price to earnings) close to its long term average. The consensus is that EPS (earnings per share) growth for next three years is expected to sustain at 15 per cent to 17 per cent CAGR growth substantially expanding the profit pool of India Inc.
Overall, the outlook remains optimistic backed by solid macros, softening oil and commodity prices, moderating inflation and robust fiscals. Any sharp correction should be used as an entry point by long term investors.
BT: How will the forthcoming results drive equity markets?
PN: To an extent, the results have been factored in by the market. The current rally is driven by foreign portfolio investment (FPI) flows, which are expected to continue as India is in a sweet spot versus global peers on the back of solid macro and improving micro environment.
BT: What do you expect from the Q1 results season? Which sectors do you think will surprise the markets and why?
PN: We expect Q1 results to be good on a year-on-year (YoY) basis, but flat or marginally positive on a quarter-on-quarter (QoQ) basis. After a long underperformance in tech stocks, a stable to marginally improved earnings guidance could spring a surprise. The US tech giants have already shown recovery in Q1 and the buzz around AI is hinting at unfolding of a megatrend. We are keenly watching the space.
The second half looks more interesting and entire hospitality sector and select consumption themes will get a fillip from the cricket world cup, festive and wedding season. The capital goods sector will continue the growth momentum on the back of election-led project announcements.
BT: What would be the right asset allocation strategy for now?
PN: We remain overweight on equity with a bias towards high quality mid-cap ideas. Investors approaching their financial goals can look at booking profit. Otherwise, long-term investors should stay invested with their core portfolio allocations without being deterred by all-time high markets.
Staggered investing in equities is the best way to ride the volatility and sector rotation. HNI clients can look at managed strategies like PMS and AIFs. For mass-affluent and retail investors, mutual fund SIP is the best way to create wealth and avoid timing the markets.
On the fixed income side, we prefer high quality accrual funds with 3–5 years average maturity. HNI clients with high-risk appetite can look at tactical allocation to private credit strategies through the AIF route to enhance portfolio yield.
Building an emergency fund equal to 6 to 12 months of household expenses and having adequate life and health insurance cover should be a priority for all investors.
Also read: Hindustan Zinc shares jump 9% today amid heavy volumes; here's why
Also read: Adani Green shares rise 3% after board approves Rs 12,300 crore fundraising plans