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Benchmark equity index BSE Sensex tanked 1,708 points while the Nifty crashed below the 14,350-level on Monday as investors pressed the panic button amid the rising Covid-19 infections across the country in the second wave. However, Piyush Nagda, Head-Investment Products, Prabhudas Lilladher in an interview with Money9 said that investors should use any correction due to the second wave of Covid as entry point. He also shared his insights on the companies and sectors which are likely to benefit from Covid. Edited excerpts:

How retail participation has increased in the equity market since the beginning of the last financial year?
Retail participation in the equity market has gone up tremendously. FY21 saw almost 1 crore new Demat accounts being opened, which was the highest in a year!

Post the lockdown crisis, markets fell by more than 35% in March 2020 followed by a spectacular rise touching all-time high levels in February 2021 on the back of a huge inflow of foreign funds. The opportunity of making fast money lured many new investors to the market owing to the availability of funds and time to dabble in trading activities. Also, the ease of E-KYC and an Aadhar-based signing process has made account opening very easy and a host of successful IPO’s have also contributed to activating participation in the Retail segment.

Most of these retail investors must be sitting on profit. What advice would you like to give to them?
Due to the continuous rise in markets, smart investors have made good gains. But many investors are still stuck with non-performing stocks. Investors with tactical and short term portfolios who have made good gains should look at shifting to disciplined investing by booking profits and channelising it to good funds through a combination of systematic transfer plan (STP) and systemic investment plan (SIP). Markets are not always kind, so short term profits must find their way to systematic investing to ensure longevity.

How do you see Sensex and Nifty moving in FY22?
Our recent India strategy research puts the base-case Nifty target at 16,020 and bull-case Nifty target at 18,977 in 15 months.

Covid-19 cases are on a rise again? Can we expect a 2020 kind of fall again?
Covid-19 cases are on a rise again and some state governments may announce lockdowns. This will disturb the growth momentum in the near term and markets have already given a knee-jerk reaction. But, we believe that the long term growth trend will continue. Indian economy is on a firm recovery path and budget has boosted the prospects due to significant capex boost, PSU divestment plan and RBI resolve to maintain accommodative monetary policy stance. Any correction due to the second wave of Covid should be used as an entry point.

Which companies are likely to benefit from Covid?
Companies in the technology and consumer sector with digital fulfilment capabilities, a strong balance sheet, low debts and clear vision will grow faster. Business models will change due to changing dynamics owing to Covid and companies will have to adapt to the new reality. We are seeing a lot of new opportunities opening up in many sectors.

Which sectors do you think can outperform in FY22?
Sub-sectors like speciality chemicals, e-commerce, insurance, electric vehicles will outperform in FY22.

Do you think the recent outperformance in midcap and smallcap will continue? Can you suggest few stocks from the broader market?
Outperformance is going to be very company-specific. Good companies in the mid and smallcap segments will continue to outperform.

How do you see the upcoming quarterly results?
Our recent India strategy report estimates 21.1% YOY growth in sales, 43.2% growth in EBIDTA and 101% growth in PBT. The fourth quarter is led by strong demand on the back of a pickup in consumer demand and infra spending. Auto, cement, consumer durables and metals will lead to topline growth, while agrichemicals, pharma, media and aviation will be laggards.