Investor-Friendly Policies Need Of The Hour

Jayant Manglik, President – Retail Distribution, Religare Securities anticipates a target of 24000 for the Sensex as well as controlled CAD levels by Diwali 2014. With efforts being taken in the direction of growth, he feels that the current lack of confidence in the macro-economic environment should blow over soon

Where do you see the Sensex till Diwali 2014? 

It’s always adventurous to put a number on an index a year down the line, but taking that chance and with disclaimers firmly in place, I would look at a target of 24000+ by Diwali 2014. This could be due to the improved investor sentiment coupled with increased liquidity, both of which would be an outcome of growth. 

What are the major triggers that you are looking forward to in the next Samvat? 

The elections next year will be a key factor and the process as well as the outcome is much awaited by markets. Since there will likely be a vote-on-account in the election year, no market movement can be attributed to it. But the RBI’s tightrope walk of reducing inflation and focusing on growth at the same time will continue to be a market mover, with each keenly watched step. Much before next Diwali, we should have a handle on CAD as well as enough leeway to work on other budgetary shortcomings, including laying out investor-friendly policies for the real economy, which will drive equity markets and stabilise the rupee-dollar exchange rate. Finally, the importance of a good monsoon can never be over- stated. 

What is your take on the present macro-economic environment of the country, and how soon do you see it improving?

We have a challenge at hand, with sluggish industrial activity and equally listless action in services. This has led to weak growth and lack of confidence. The pace of infrastructure project completion is slow, and not many new projects are being launched. At the same time, consumption is also weakening in rural areas. There has also been a double whammy from oil imports, with rising prices and a devalued rupee. 

But I do feel that we should be out of this rut sooner rather than later because several practical steps have been taken, though the outcome may take a few more months. The weaker rupee has made exports attractive again, and the government is also moving to expedite infrastructure projects. There is also a strong likelihood of the twin deficits being contained within the projections made earlier. 

Which are the sectors or stocks that you are betting upon for the next one year?

We are optimistic about the economic outcome in the next one year and several sectors look attractive for a variety of reasons. NBFCs look attractive along with private banks because of the upcoming growth opportunities, while defensive sectors like pharma and FMCG continue to be appealing because of their all-seasons flavour. Our IT industry continues to excel and the top stocks therein are a good investment choice. 

In individual stocks, one could invest with a long-term horizon in stocks like Axis Bank, Bajaj Finance, Havells India, HCL Technologies, L&T, Lupin, Tech Mahindra and IndusInd Bank – most of which fall in the favoured sectors mentioned above. 

What are your suggestions for retail investors keeping the current market scenario in mind?

Times change, markets change but the rules for investors always remain constant because they are based on common sense distilled from centuries of experience. So, good investments can be added on every dip, but in a staggered manner. And ‘good’ here means fundamentally strong stocks, not only the flavour of the season. Long-term investments give the best returns as also the benefit of long-term capital gains, i.e. zero tax. Portfolio diversification is very important because it reduces portfolio risk. Therefore, invest across assets with suitable allocation as advised by qualified financial advisors.