Expert view: Siddharth Oberoi, the founder of Prudent Equity, believes the Nifty 50 may give a double-digit return this year as the outlook for the market remains positive. In an interview with Mint, Oberoi shares his views on sectors he is positive about and how investors should navigate market volatility. Edited excerpts:
The focus should remain towards investment-led growth. We continue to remain bullish on the same themes.
While I don't foresee any significant policy changes, I think it's wise to pay attention to the Budget and the discussions surrounding it, including how funds are allocated.
I also think it's worth keeping an eye on major reforms like the farm laws and the electricity act, which were supposedly the big reforms expected by the BJP.
Strong earnings growth is anticipated, medium-term volatility may persist, and global factors will continue to significantly impact earnings.
The Nifty is already up 7 per cent year-to-date; assuming global conditions remain favourable and earnings momentum holds, another 3-4 per cent gain over the next six months shouldn't be too difficult.
We continue to follow a stock-specific approach and not look at indices and their valuations in isolation.
Looking at historical valuations in small and mid-cap space and commenting on them being expensive at the index level is not the right approach.
There is valuation discomfort in some pockets and opportunity in other places, which is the story of every bull market.
There are still individual opportunities to make long-term capital deployments.
We remain bullish on our original theme of infra, construction, and financials. We recently added a PSU bank and an NBFC to our holdings.
Most infra companies' order books are booked for the next couple of years, giving sufficient earnings visibility.
Financials like NBFCs and Banks are growing their loan books by 20-25 per cent and remain extremely cheap on valuations.
In times of turmoil, the only prudent course of action is to stay invested.
During last week’s volatility, an investor who did nothing and stayed the course is sitting on even better returns as of today in comparison to the exit poll outcome, considering Nifty hit an all-time high compared to those who would have panicked and sold during the fall.
Short-term volatility has and will continue to exist, so investors must embrace it to be a part of the wealth creation journey.
India is in a great place right now. Corporate earnings growth is at an all-time high, and ground execution is progressing rapidly.
The next three to five years will deliver decent returns, and with the increased participation of retail investors, volatility is also likely to be on the lower side.
The journey will not be linear; investors need to have a dynamic attitude and the ability to shift course quickly due to changing macro and micro environments.
Global headwinds will continue to act as a speed bump but not a deterrent.
We honestly believe predicting rate cuts is futile for a bottom-up investor.
Unless one is trying to take a call on financials or on a broad index level, focusing on the individual profitability of the company makes more sense.
That being said, RBI has been very vigilant and proactive in taking the right steps. We expect the first rate cut to happen by the end of this year.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
