Expert view: Don’t foresee significant policy changes; bullish on infra, financials, says Oberoi of Prudent Equity

Expert view: Siddharth Oberoi, the founder of Prudent Equity, does not expect major policy changes from the new government. He is positive about the prospects of the Indian stock market.

Nishant Kumar
First Published13 Jun 2024, 01:12 PM IST
Expert view: Siddharth Oberoi, the founder of Prudent Equity, believes the Nifty 50 may give a double-digit return this year as the index is already up about 7 per cent for the year so far.
Expert view: Siddharth Oberoi, the founder of Prudent Equity, believes the Nifty 50 may give a double-digit return this year as the index is already up about 7 per cent for the year so far. (Prudent Equity)

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:

What are your expectations from the new government? Do you expect any major shift on the policy front?

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.

Also Read: Expert view: Political stability, GDP forecast key positives but high valuation a key risk, says Priti Goel

How could the market behave in the medium term? Can Nifty 50 end the year with a double-digit return?

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.

Also Read: Nifty 50 hits a fresh record high: Can it touch 24,000 before the Union Budget 2024?

Are you cautious about the mid and smallcap space? Despite concerns over premium valuation, these segments have outperformed the benchmarks this year so far

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.

Also Read: Modi 3.0: Stability concerns premature; government may stay fiscally prudent amid populism: Kotak Securities

What sectors are you positive about for the long to medium term?

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.

How should investors navigate market volatility? What could be some ways to protect gains in a volatile market?

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.

How optimistic are you about India's growth outlook? Do you see any major challenge that could derail economic growth?

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.

Also Read: Modi 3.0: As Nirmala Sitharaman back on FM's chair, share market pundits bet on…

When do you expect the RBI to cut rates? Can we expect an overall rate cut of over 100 bps?

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.

Read all market-related news here

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.

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First Published:13 Jun 2024, 01:12 PM IST
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