We are in mega bullish mkt; 4 key themes to dominate

Anish Damania, CEO, JM Financial, says: “We will see markets doing much better, capital raise is becoming more prolific and investors will continue to doubt this and because investors are doubting this, there is room for appreciation. The key themes which we feel will dominate the India story will be in the manufacturing sector, finance sector, logistics and infra.”

Given the kind of backdrop that we are looking at, the fact that there will be triggers down the line with respect to the overall elections, the valuation picture for our own markets, where is India standing at the current juncture?

According to us, and we have been having this view for some time, we are on the throes of a mega bullish market lasting for several years, starting from 2020 to 2030. And I feel that this is the biggest bull run which we will see and which will be characterised by both stock markets doing very well and capital markets also doing extremely well. This is the time when India will require the funds, there will be a lot of activity and we feel that this is a time which we need to capitalise on.

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A lot of macro factors are falling in place for India’s growth story to be there. There is an expected election down the corner but if the BJP returns with a thumping majority, we will have an extended market, but that majority is not yet fully factored in the market today in my view.

In the runup to the election – be it the 2003 and 2004 election, 2014 or 2019 – markets tend to rally. Do you think a similar factor could be at play from here till May or December to April, we could be in for a nice 5-7% Nifty move?

Our alternative analysts had done this work on how we have done in the runup to elections and the minimum gains have been 6%, stretching up to about 21% at times. I think that trend may not be broken. We will have a rally before the elections, but that will start mid December after the state election results are out.

Where does the interest lie in your conversation with clients, etc? Which are the companies or niche areas that are seeing a lot of excitement right now?

Across-the-board, midcap and the smallcap indices have been touching new highs before the main index and that clearly shows that midcap and smallcap companies are the flavour of the day. We are seeing interest across the board. So, in the 160 companies which are coming to our conference, about 500 odd investors have signed up for that and we are seeing very strong participation across all sectors. There are overflowing meetings for most of the companies that are there in our conference which just shows that the mood now is extremely good. People want to know what is happening. There is a lot of excitement and particularly this quarter has been better for many of the corporates. They would like to have some view about what is happening at this point of time.

Everyone on the street we spoke to in and around the Diwali show had just one simple message. There is a bubble in smallcaps, there is trouble in midcaps and there is value in largecaps. There seems to be a consensus building that one should sell smallcap, avoid midcap but buy largecap?

Okay and yet we see midcap and smallcap indices touching highs before the Nifty 50. So, wherever there is scepticism, I always find that there is an opportunity because it is always that, oh, if the market corrects by 5% or 7%, I will buy. If the market corrects by 10%, I will buy and this has been the phenomena for quite some time. Markets may have corrected but have rallied sharply immediately after the correction and crossing the previous high that they touched. That is going to be the trend for quite some time as we go into the next few years.

We will see markets doing much better, capital raise is becoming more prolific and investors will continue to doubt this and because investors are doubting this, there is room for appreciation.

Leave us with a key big theme or one key stock or a sector idea which is a clear high conviction buy right now.

Rather than putting down to one thing, I will talk about broad-based themes which should pan out over the next five years. Central to that is the manufacturing theme. We feel there is a lot of activity over the past 24 months. The government is extremely keen to see that India manufacturing does very well and around India manufacturing while the key companies will continue to do well, the key manufacturing companies will continue to do well, be it engineering precision, be it process industries, be it infra.

Finance will also do very well because finance is a bloodline of any growth in the economy and I think financial sector is expected to do extremely well across all sectors, be it NBFC, be it banks and across all, be it private or be it public sector, be it microfinance, be it small banks, be it any class of assets in the financial sector that will continue to do well.

We feel another big sector which is expected over the next five years is going to be logistics. There are a lot of things happening around logistics. Globally, India is competitive on the men and material costs and energy costs but not on logistics. Over the last few years, we have seen several things happening on the logistics cost side and we will continue to see that over the next five years logistics costs are expected to fall and I think large corporates are expected to come in a very big way into this space and make sure that logistics costs get aligned to where the global logistics costs are. If that were to happen, India’s story can continue much further.

So, we feel that the key themes will be in the manufacturing sector, finance sector, logistics and infra. So, these are the key themes which we feel will dominate the India story.

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