ETMarkets Smart Talk: IT, pharma, and specialty chemicals will create multibaggers in next 10 years: Amit Jain

What is powering the rally in the Indian market – is it the festive mood, change in global sentiment or earnings expectations?
Yes, Indian markets look to be in afestive mode, as they continuously decline to go below 17,000 on the Nifty50. If you closely observe, the Indian market is probably one of the best markets in the world from June 2022 bottom.

At a time when Dow Jones has already breached June 2022 lows, the Indian markets have a very strong resilience on the downside.

There are two factors: 1) Very strong domestic flows to equities at every dip; and 2) market expecting very strong Q3 numbers on account of Diwali, as a lot of revenge shopping and celebration will happen this Diwali.

Diwali is just around the corner – what is your advice to investors for Samvat 2079? Where is the market headed? Are new highs in the offing?
In our view, the Indian market will touch new highs much earlier, compared to any other market in the world.

There is a very high chance that by the end of this calendar year, we will have a new high for the Nifty.

Every dip in the Indian market is a buying opportunity, as this ongoing decade of 2030, is going to be India’s decade.

We are in the last quarter of the calendar year 2022 – would we be able to see some fireworks or the holiday season will keep the mood subdued?
I am sure we will have fireworks post-Q2 numbers & this resilience & positive momentum of the Indian market will continue till the end of this calendar year.

Will the rupee depreciation continue in the December quarter? Which sectors are likely to get hit the most?
If you closely observe, INR has been one of the strongest currencies in the world except for the US dollar. INR has outperformed GBP, Euro & Yen by miles in YTD performance compared to USD.

In my view INR will continue to be one of the best currencies; however, it will be challenging for the Dollar index to cross 124 on the higher side, which it touched last time in the year 1985.

If the dollar continues to be stronger, then all import-oriented sectors may take a hit on their quarterly earnings.

Few global investment banks have raised concerns of the rally seen in Indian markets. What are your views? Do you think that the outperformance is sustainable?
These global banks have been raising concerns for a long time, but now it is a different Indian market, which is more driven by domestic money rather than foreign investors, hence we will continue to buy Indian Markets at every dip.

The outperformance comes with much higher growth possibilities of the Indian economy, which is rare in the world nowadays; hence, this premium of the Indian market is justified.

We have a good selloff in markets across the board – any stock(s) which is still a good buy on dips stocks for a period of 1 year?
In my view, the IT & pharma sector is in the last leg of the bear phase. We see some excellent opportunities in both these sectors from the next 1-to-3-year horizon.

How should investors deal with high PE stocks, especially the ones which are trading above their industry PE. What are the other valuations parameters that one should deploy while taking a buy or sell decision?
At this moment investors may avoid high PE stocks as they will have both price and time correction if their Q2 results were not in line with expectations.

As of now, we see some value investing opportunities in the IT, Pharma and Banking space. Hence, investors may choose to prefer these value opportunities over expensive PE stocks.

While selecting a stock, investors must choose those stocks which has higher ROE, ROCE & lower Debt to Equity ratio in addition to a reasonable PE ratio compared to Industry PE.

Any theme which are multiyear themes which has recently surfaced and could well produce wealth creators of the future?
At this moment IT, pharma, and specialty chemicals will create the next multibaggers in the next 10 years.

Any sector(s) which you think investors should avoid in the December quarter? If yes, why?
Investors may have lower weightage in FMCG & overweight IT, Banking & Pharma from next 1 to 3-year horizon.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)