Which Sectors Will Lead the Next Rally? ft. Mayuresh Joshi | CA Rachana Ranade

"so the last four years we had a tremendous run yeah valuations had become a little bit more expensive for the market there were no two ways about it uh main index including the broader markets and therefore I think a lot of fro had genuinely built up for the markets people who had gotten and stayed put with their investment specifically in the broader markets a eight time 10 time 12 time return which you know happens over 10 or 12 years happened in two or three years right so the appetite of assuming that that returns will keep on coming at the same Pace unfortunately it will not happen in the market"

"as we stand the dollar Index is at 107 it has hit an alltime high of 110 it has breached its 21 and 50 moving the average and again I think a lot of Institutions for for your investors at large because we track Global markets we speak to a lot of global institutional investors as well they track technicals as well right and they track technicals very very closely so if it is breached at 2150 moving average if it is coming off I think it becomes a very poent sign if it starts coming off even more that inverse relation in Nifty might start happening and maybe the next few few weeks or months as one common indicator or one parameter that you are tracking maybe the bottom is probably close"

"three or four sectors are actually coming up one obviously the entire rural theme is coming up uh into our sector Focus lists so you might include stocks which are agrochemicals you might include stocks which are fertilizers tractor or farm equipment makers seed companies shrimp farm makers so I've given you a whole host of names that are actually getting thrown out through our list so rural becomes one area which is clearly getting thrown out second I think healthare stroke uh uh hospitals a large part of this universe is actually getting thrown out and if you probably analyze and dissect Q3 numbers uh I think they're looking reasonably placed third I think everybody's talking about why kex and why kex should not do well I think we Divergent views because the budget itself has thrown R very frankly if you add supplementary grants it's a seriously good number so I think the markets are getting it wrong somewhere is is what I feel maybe I'm completely wrong but but time will tell uh but selective um EPC players selective water treatment companies selective cement companies are actually getting thrown out in terms of ours RS ratings uh and fourth I think selective financials"

"so if you probably look at the macro picture right uh there are three four elements that probably happen as far as the Indian economy is concerned and just let's talk about the Indian economy that's where we are interested in uh one in terms of our deficits both fiscal as well as current account deficits how are they placed so the Finance Minister the ex cheer has very very suckly put it in the budget right now that we're on the fiscal path and that government capex is going to continue at a good pace"

"the second aspect obviously here that we speaking about is the spending element and if spending comes through the multiplier effect is huge because that gives boost not just to our GDP but it also gives boost to private capex to come through which has been lagging so if these elements starts coming through the three engines that we speak about in terms of Investments consumption and expenditure I think all these three elements that support GDP will start coming back and GDP which has been languishing at a micro level at a macro level at around 6 .2 will start showing signs of improvement as we head into the second half of the nextal year"

"if a large part of your portfolio mix if it was skewed towards midcap lar which has been the case again as we've seen that in the last three years four years in the next rally which comes through right uh uh the weak stocks or stocks which are fundamentally not strong you please get out of that so I think that is the most sincere advice that I can give you but again I think a large part of the market this year will move as I said as as our our software is throwing out is towards domestic stories largely"

"the second in terms of your direct Equity investment again I think it should be a multi-asset allocation strategy that you should be deploying and why I'm saying this is equities will do well over the next 8 to 10 years but again as a diversification it's always better that a part of your portfolio happens towards bonds a part in terms of either gold ETFs as an example because they become a sort of a hedge when equities are not doing well and protect the kind of downside risk or brw Downs that get felt in in terms of watching your portfolio zeroed when the Market's"

"so another 23 trading sessions and we'll be close to the longer term hit ratio that we probably done in terms of average draw Downs that same period of March 15 uh to September 15 was a 22% draw down uh the April 22 to June 22 phase was a 15% ra down 18% draw down and at the 15% draw down now if I have to just play with numbers and I'm just purely playing with numbers maximum reach there so even if you assume that you correct 5% more right we are close to 21% Mark a 5% correction more from he's current level I'm not scaring everybody will probably mean a 1100 Point drop on the Nifty right and 1100 Point drop on the Nifty will mean that the Nifty reaches 21,000 in terms of levels"

"earnings downgrades is around the pegging was f27 exit number should be around 1200 it has now come down to an average consensus of 1150 now simple 1150 to get your p ratio will come less than 0 times structural draw down there is no other elements that we seeing down the horizon which will make us feel that you know earnings are going down the cliff SCB situation and why I'm saying this is the latest figure on the pat earnings have shown stability last two quarters it was 4% it has shown a 5% rise with the Kum that we spoke the Cuban tax cuts that we saying if there is an increased scope of earnings that is going to come through"

"the consumption story which is expected to grow exponentially in the Indian context uh manufacturing which has taken a good strong foothold expected to increase and in terms of our own PPP right we are already there in the top four because of all these factors put together we'll obviously be having a larger share in the next few years"

"three or four sectors are actually coming up one obviously the entire rural theme is coming up into our sector Focus lists so you might include stocks which are agrochemicals you might include stocks which are fertilizers tractor or farm equipment makers seed companies shrimp farm makers"

"fourth I think selective financials uh so I think um one of the leading Banks which is underperformed so far has shown tremendous amount of strength so I think that bank within the large cap names uh can actually be the leader of the next Bull rally"

"if you probably look at the macro picture right uh there are three four elements that probably happen as far as the Indian economy is concerned and just let's talk about the Indian economy that's where we are interested in right uh one in terms of our deficits both fiscal as well as current account deficits how are they placed so the Finance Minister the ex cheer has very very suckly put it in the budget right now that we're on the fiscal path and that government capex is going to continue at a good pace so those two aspects are going to continue"

"GST collection tax collections might continue at Ro Bas now there might be question marks that if the economy is slowing down and with the tax cuts a large part of the heavy lifting will have to be done by select individuals as far as direct tax is concerned and what happens to GST the economy probably slows down with the tax cuts coming through I think one lakh CR into the system will basically mean that a large part of that pool will either get saved or a large part of that pool will get spend in the economy"

"now let's assume Nobody Knows the figures whether it's 20 80 30 40 but let's go with the ratio of 40 60 where 40% might get saved 60% might get saved uh spent in the economy if 40% gets saved wh those savings go right either it goes into fixed deposits ppf or it comes back to the markets in form of ss uh so either or I think uh the banking system which was affected because of lower deposit growth has larger deposits coming their way because interest rate Cuts as we are seeing it because the US might delay it the rest of the globe is M might going to delay it as well would mean that there might be accre toward deposits uh and as banking deposits improve I think a large part of that tool might come down in terms of coming back as an asset pool for giving advances for institutions as an investment spend and Manufacturing coming back"

"earnings which had slowed down will start coming back as well right so as earnings starts coming back uh uh the markets function in terms of reating of numbers and markets are always do four quarters quarters down the line put make a bull case so we'll make a bull case and a base case at that point of time that you know Market earnings are improving and next year it will be even more as you said the base for the first half will be lower next half's base will be even higher correct correct so earnings coming back will mean that FIS will have no choice F will say Indian market where is the other option that is available at this point of time where there is economic stability political stability uh regulatory stability"

"Q4 GDP bump because tax cuts that has happened q1 you will see consumption and exponential spending coming through and Investments hopefully coming through as well and therefore corporate are things bottoming out and as we always say in the markets right markets are slave of earnings"

"second I think healthare stroke hospitals a large part of this universe is actually getting thrown out and if you probably analyze and dissect Q3 numbers I think they're looking reasonably placed"

"as I said next few weeks but if we go through this periodicity of pain and survive this which we should I think as SE in I think the first quarter say I think bottoming process start and I'm pretty sure that when we speak again I think hopefully next year definitely we will out of 21 years we'll be saying that 18 years the s six Clos in the P"

"the first move will always be led by large caps so large caps will lead the first move for the markets because the confidence is still not there right the confidence is still to be with large caps once that confidence comes and the market has moved a good 5 6 8% the large caps have moved 10 15% to a certain extent again hypothetical numbers is what I'm putting through the confidence in midcaps and small caps starts coming back"

"simple 1150 to get your p ratio will come less than 0 times structural draw down there is no other elements that we seeing down the Horizon which will make us feel that you know earnings are going down the cliff SCB situation and why I'm saying this is the latest figure on the pat earnings have shown stability last two quarters it was 4% it has shown a 5% rise with the Kum that we spoke the Cuban tax cuts that we saying if there is an increased scope of earnings that is going to come through I think down assuming historically on what you've seen as the worst draw Downs on history that goes by maybe 1100 12 1300 odd points which makes it even more attractive from a Nifty p ratio"