Indian share market benchmarks BSE Sensex and Nifty 50 have been witnessing volatility amid the second COVID-19 wave. Due to this, foreign institutional investors (FIIs) turned net sellers in the month of April, after being net buyers for six consecutive months. Sanjiv Bhasin, Director, IIFL Securities Ltd, told Surbhi Jain of Financial Express Online in an interview that the US and other developed markets outperformed in the previous month, which encouraged near term shift of money. In April, US stock indices surged up to 5.4 per cent, while Sensex and Nifty fell as much as 1.5 per cent. Sanjiv Bhasin said that he is overweight on pharmaceuticals, banking sector stocks among others. Here are edited excerpts from the interview:
FIIs turned net sellers and sold Rs 10,000 cr shares in April after remaining net buyers for the 6 straight months. What fuelled FIIs selling in April?
Fear and rising Covid cases in 2nd wave. This also on the back of the US & other developed markets being outperformers which prompted a near-term shift of money along with ETF outflows.
How do you see Indian share markets in May? Do you see more downside, which sectors should investors watch?
Range bound, as local funds will support the downside with marginal selling by foreign investors. However, as soon as you peak in Covid cases which could be by the second week May, expect last week’s rally which could take you back to 15,000. Pharma, metals, banks, and autos will lead the rebound.
A record number of demat accounts opened in FY21, do you expect the same in this fiscal and why?
There is no better asset class than equities for the Indian context over the next 10 years as growth rebound strongly with double-digit GDP growth which implies that in all asset classes equities will see retail interest growing manifold.
Where do you see the Nifty 50 and Bank Nifty in May series? What would be an appropriate strategy for traders?
Nifty 50 index at 15,000 level by end May and Bank Nifty close to 34,250 levels. Do a SIP (systematic investment plan) in select stocks or indices.
What are your overweight and underweight sectors? Which stocks do you expect to deliver decent returns in the 3-5 months horizon?
Overweight sectors are Pharma, Midcaps, Banks and Auto. While underweight sectors are Metals and Consumer Discretionary. The top stock picks for the 3-5 months horizon are Lupin, Escorts, RBL Bank, HDFC Bank, Tech Mahindra and NBCC (India) Ltd.
Going ahead, what factors would drive the stock markets and what are the key risks?
Missing the next wave of reopening which could see huge spending from consumers and unleash huge profit for Corporate India, global liquidity in abundance and huge impetus to buy stocks as global markets led by the US hit new all-time highs. Rise in cases persisting, with vaccine drive seeing obstacles could derail the recovery temporarily.