Santosh Kumar Singh, Head of Research Wing at Motilal Oswal AMC believes that the market will hit higher levels in the next six months if the Ukraine-Russia war does not spread across Europe. In a conversation with Moneycontrol, a dynamic financial analyst said that as long as commodity prices do not overwhelm the market, the market looks very attractive at the fundamentals level.
Excerpts from a conversation with Singh:
The market cap-to-GDP ratio, or so-called Buffett indicator, is at a record high of 110 percent since 2007. Do you think we are still trading at high valuations?
Singh said that looking at the market cap-to-GDP ratio, there is a need to know the fact that since 2007 there have been many new listings in areas which were not there earlier. Unless there is a sharp fall in commodity prices, the market looks quite attractive at the fundamentals level.
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Looking at the current market, do you think we are close to a bottoming out process?
Santosh Kumar said that given the war situation, it can be very difficult to tell the market bottom. If this war does not turn into a full-fledged European war, we expect the market to remain higher in the next six months.
There could also be other factors leading to an increase in commodity prices in the near term which can make the markets restless. However, most of this is expected to settle within a year.
Most of the sectors and stocks are trading below their highs. Where do you want to put your money?
Financial services, real estate and some capital goods sectors are some of the stocks that have seen the biggest decline despite having very good fundamentals and economic tailwinds. For this we would like to invest some money in these sector stocks.
Why are Indian markets still not showing a major correction despite a 85 per cent rise in oil prices in just two and a half months and continuous selling by FIIs since October?
In response, Singh said that DIIs are making major contribution in this. We have seen DIIs remain firmly in the Indian markets during these uncertain times as the India story continues. Global events visible at this time are causing temporary dislocations.
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Is it time to go overboard on the auto space which is down 16 percent from January highs?
Giving his opinion on the auto space, Santosh Kumar Singh said that in my view, if anyone wants, one can start buying in passenger vehicle and commercial vehicle.
(Disclaimer: The views and investment advice given on moneycontrol.com are the personal views and opinions of investment experts. Moneycontrol advises users to consult a certified expert before making any investment decision.)
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