“If the markets fall from these levels, there would be sustained buying led by domestic FIs and other investors who would come and buy.
https://economictimes.indiatimes.com/markets/expert-view/why-did-it-and-realty-stocks-rally-last-week-arun-malhotra-of-capgrow-capital-advisors explains/articleshow/92022679.cms
Synopsis
"I see market stability in the near term, and any major headline risk may see some negative reaction, but the bounce will also be equally stronger. But every bounce back now will be followed by retail selling. The psychology of retail and HNIs will be to sell and book profits at every rise. Any significant upside is possible if we see a reversal in FII flows."
The price declines recently in IT stocks have made them quite attractive looking at their growth prospects. Similarly, the real estate sector has seen strong momentum in home sales, as reflected in a higher number of property registrations, says Arun Malhotra, Founding Partner & Portfolio Manager, CapGrow Capital Advisors.
In an interview with ETMarkets, Malhotra said, “If the markets fall from these levels, there would be sustained buying led by domestic FIs and other investors who would come and buy.” Edited excerpts:
A strong week for markets where bulls pushed the benchmark indices higher by over 1% each. What led to the price action?
The markets have been in an oversold zone driven by continuous FII selling and negative head news.
The quarterly numbers have been good and in some cases, the commentary and outlook for the next few quarters are very encouraging.
This has led to stabilization in the prices despite the FII selling. The valuations have come to reasonable for a lot of stocks while the growth outlook remains healthy. This led to markets inching up last week.
Where do you see markets heading in the coming week? Do you see a similar momentum?
I see market stability in the near term, and any major headline risk may see some negative reaction, but the bounce will also be equally stronger.
But every bounce back now will be followed by retail selling. The psychology of retail and HNIs will be to sell and book profits at every rise. Any significant upside is possible if we see a reversal in FII flows.
In term of sectors, Realty and IT stocks saw buying interest. What led to the price action? Do you see momentum continuing in the coming week as well?
We have been maintaining the stance that the demand scenario in IT is quite strong and most of the changes like digitization, cloud, AI, etc. are structural in nature and here to stay for long.
The price declines recently in IT stocks have made them quite attractive looking at their growth prospects. Similarly, the real estate sector has seen strong momentum in home sales, as reflected in a higher number of property registrations.
The real estate sector is witnessing a higher number of new launches that may create an oversupply situation in next the 2-3 yrs, but till then the sector looks to be in a sweet spot.
Timken India rallied more than 30% in a week. What is driving the price action and how does it look on charts?
Superb quarterly numbers drove the stock price up. We don’t track the charts but fundamentally, the MNC company is on a very strong wicket.
Do you think the market has made a bottom near 15700-15800 levels?
As I mentioned in my earlier conversations, valuations have become reasonable. . If the markets fall from these levels, there would be sustained buying led by domestic FIs and other investors who would come and buy.
The investors are not leveraged at all and hence a steep fall is ruled out. Rather a lot of companies and sectors have a very robust outlook that will drive growth in profitability as well as their stock prices.
We also saw a Fat Finger trade on Thursday. How can one avoid these kinds of episodes and what is the way out in case someone has made a mistake?
We have seen similar situations in the past also. The one and the only solution is better risk management through the use of technology.
The order itself would not have gone through only, and my understanding is there should be enough filters inside the broker’s office that should have given a warning.
My credit card transaction gives me a warning If I do a bigger size transaction than my normal, such a huge trade should have a lot of inbuilt checks and balances.
Even there should be some checks at the exchange level to ensure the bulk order that is out of the range is revalidated or rejected once by the system.
The loss arising out of this will now lead to claims and counterclaims and disputes with insurance companies. Technology is the best solution, where the majority of people underinvest.