Market optimism to stay intact in coming quarters: Validus CIO
Hyderabad: Multiple factors including economic recovery, earnings improvement, import substitution, China-plus strategy, improvement in corporate capex, and recovery in demand are making a positive impact on the stock market. The optimism in the market is here to stay in the coming quarters, says an expert. Rajesh Cheruvu, chief investment officer, Validus Wealth, told Telangana Today, […]
Hyderabad: Multiple factors including economic recovery, earnings improvement, import substitution, China-plus strategy, improvement in corporate capex, and recovery in demand are making a positive impact on the stock market. The optimism in the market is here to stay in the coming quarters, says an expert.
Rajesh Cheruvu, chief investment officer, Validus Wealth, told Telangana Today, “Stock markets have been breaching lifetime high levels due to broad macroeconomic recovery. Covid led to some rebooting in the economy and better monsoon in the consecutive years has helped market revival over the years. Rural economy is also seeing tangible growth with the government making conscious efforts to boost up rural liquidity. Liquidity position has also been good as foreign institutional investors continue to pump in money. There is also value unlocking in the private market, which is attracting private equity investments into India, particularly in the unicorns.”
Another important trend is that domestic investors have started directly participating in stock trading. Earlier, the focus was on mutual funds. Now, the outflows from mutual funds have translated into direct participation by the investors, which will help mid to small cap stocks in the next four quarters. But, he cautions, investors should not rush up to book profits in hurry.
He observed, energy and IT stocks had been leading the rally. BFSI in the coming months should lead the rally after the sector goes through the ongoing restructuring exercise. FMCG and pharmaceutical stocks could also see growth in the coming months. New investors should ideally stagger in their deployment, as there could be some correction in the next 2-3 months up to 5-10 per cent.
“On the other side, the urban economy is currently hit due to Covid. There is also a concern with regards to credit growth which is at 6.5 per cent now. In the next four quarters, there are expectations that it may touch double-digit growth. The Indian economy has the necessary recipe for positive growth. However, the only challenge that the economy could face could be due to any slippages in divestments,” Cheruvu noted.
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