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Be ready for a 15-20% correction in markets: Raamdeo Agrawal

Be ready for a 15-20% correction in markets: Raamdeo Agrawal

Ace market investor tells Business Today TV that investors should stay in the market even if it's volatile or in a correction mode.

Agrawal's thumb rule for investors this year is – “Stay in the market even if it is volatile or in a correction mode”. Agrawal's thumb rule for investors this year is – “Stay in the market even if it is volatile or in a correction mode”.

Indian markets will see new highs and set new records this year, says ace market veteran Raamdeo Agrawal, silencing naysayers who preach otherwise. Speaking exclusively with Business Today TV's Udayan Mukherjee, the co-founder of Motilal Oswal Financial Services said that the NSE Nifty, which is hovering at an earnings per share (EPS) of around Rs 750, will rise to an EPS of Rs 850 this calendar year, pulling the index up along with it.

Agrawal's thumb rule for investors this year is – “Stay in the market even if it is volatile or in a correction mode”. He believes the markets could fall by up to 15-20 per cent before recovering on the back of bullish earnings, especially in the banking and infotech sectors. The other reason he cites is the start of a fresh corporate capex cycle which he says will yield dividends soon.

Agarwal's other mantra to investors is to focus on companies and individual stocks rather than follow the broader market. "Churn your portfolio instead of increasing your portfolio allocation," he said.

As a word of caution, the veteran investor feels that the markets will be under pressure because of withdrawal of global stimulus and rate hikes by various central banks. "Global investors traditionally sell emerging markets and buy developed markets," Agrawal said, adding that the FMCG sector will not give the same returns as last year, given the increasing competition from smaller start-ups and their inability to maintain the growth pace.

While Agrawal is bullish about the real estate sector, which he says is booming again, thanks to low interest rates, he feels investors should put their money in stocks of real estate companies rather than physical property. His reason -- returns are better in realty stocks.

On the Union Budget, Agrawal is keeping his expectations low. He doesn't expect any relief in corporate and indirect taxes but feels there could be some rationalisation in personal income tax. However, he is of the view that the government needs to increase spending via infra or fiscal support to ensure the economy continues to grow at 8-8.5 per cent in 2022-23. This, he feels, will generate the kind of money through taxes the government needs to fulfil its social commitments.

One of the disappointments of 2021, according to Agrawal, was the government's disinvestment diary. While Air India sale came through, he said the government failed to ride the stock market wave to list other PSUs. "Government has to innovate on how they close the disinvestment deals. The pace is very very slow and not picking up," he rued. 

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Published on: Jan 06, 2022, 8:41 AM IST
Posted by: Mehak Agarwal, Jan 06, 2022, 8:37 AM IST