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The ongoing correction in US markets has spooked investors across the world. Dow Jones is now up just 1% YTD while S&P500 is barely in the positive territory with 0.5% gains. On the other hand, Nasdaq is now down 1.27% YTD.
Domestic benchmark index Sensex, has however, managed to deliver 6.50% return till date.
In an interview with Money9, AK Prabhakar, Head of Research, IDBI Capital Markets, highlighted the key risks and investment options available.
Edited excerpts:
Q: What are the possible key risks for Indian equity markets?
Prabhakar: India’s GDP is likely to see double-digit growth in FY22 and over 7-8% after that for a few years. We remain constructively positive on the market from the long term perspective. The only possible risk is rising bond yield, higher inflation and the highest ever global debt levels.
Q: Sensex and Nifty are hovering around their all-time high levels. What strategy should investors adopt?
Prabhakar: For retail customers, systematic investment plans (SIP) in good mutual funds or disciplined SIP on a few bluechip companies or index ETF.
Q: How prepared are new investors to deal with market uncertainties?
Prabhakar: We need to regularly conduct seminars, teach-ins and made them aware of the probable risks and that’s what IDBI Capital is continuously doing.
Q: What is your view on Bitcoin?
Prabhakar: No view on cryptocurrencies.
Q: In which space would you like to reduce or increase your holdings?
Prabhakar: I would like to reduce our holdings in metal counters after the recent run-up. On the other hand, consumption and production-linked incentive (PLI) sectors look attractive to us.
Q: Midcaps are hovering at record high levels. Do you see big gainers coming from broader markets now?
Prabhakar: Yes, agrochemical, chemical, insurance and asset management companies look very attractive.
Q: Can you list five stocks that can give good returns to investors in the next 1 year?
Prabhakar: Nippon Life India Asset Management, Bayer Cropscience, Nestle India and HDFC Life and Alembic Pharma