While bears were busy warning against an impending equity winter amid fears of looming recession, bulls quietly managed to propel Sensex and Nifty to fresh record high levels. The ongoing rally has, however, left many investors puzzled as to whether they should follow Warren Buffett’s classic rule of being fearful when others are greedy and being greedy when others are fearful.
With many small and midcaps struggling to shine like the way they did in the last two years of 2020 and 2021 when Dalal Street was overflowed with helicopter money amid quantitative easing by global central banks, making money has not been as easy in 2023.
“There is no greed as of now. We have a lot to catch up before greed comes in. Macros such as crude oil prices, inflation trajectory and dollar movement are all signalling towards further upside. The Indian market was almost silent in the last one year or so. We have a lot of ground to cover before greed comes in,” said Rishiraj Maheshwari, founder of RISCH Wealth and Family Office.
While the Dow Jones, which is widely tracked by Indian investors, is down about 6% so far in the calendar year 2022, Nifty has given enough signs of decoupling by rallying 7% this year. On Monday, while the Sensex made an all-time high of 62,701.4, Nifty touched a peak of 18,614.25.
Technical analysts see Nifty inching towards the 19,000 mark in the December derivative series.
At the start of the December series, FPIs were net long of 8,79,500 contracts in index futures, compared with 2,32,800 contracts at the start of November series.
Morgan Stanley’s Ridham Desai sees the Sensex inching towards 68,500 in the next 12 months. He sees a 30% probability of the index touching the 80,000 mark provided India is included in global bond indices, commodity prices correct sharply and earnings growth compounds at 25% annually.
Given the premium valuation that Nifty is trading at compared to other peers in the emerging market, market gurus suggest investors to stick to their core asset allocation strategy and not get swayed away by the bullish sentiment on the Street.
“One needs to be balanced as most of the positives are in the prices for now. Incremental allocations to equities could be done in a staggered manner as opposed to lumpsum investments,” said Lakshmi Iyer, CEO- Investment Advisory, Kotak Investment Advisors.
Which stocks to buy?
‘s Siddhartha Khemka said one should review the portfolio carefully and realign according to sectors that are likely to drive the next leg of growth. The brokerage is overweight on sectors like BFSI, auto, and consumer and would look at adding IT post the recent correction.
Morgan Stanley, on the other hand, is adopting a barbell portfolio strategy going into 2023, one which is overweight domestic cyclicals including rate-sensitives and is also overweight technology to add global exposure but is underweight global cyclicals and domestic defensive sectors.
The list of stocks on which the global brokerage is bullish on includes
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)