Expert view: Indian stock market momentum may continue; stick to domestic themes, says Jimeet Modi of SAMCO Group

Expert view: Jimeet Modi, founder and CEO of SAMCO Group, is positive about the Indian stock market due to economic growth and better-than-expected quarterly results. In an interview with Mint, Modi said the indigenisation process and liquidity measures undertaken by the regulators will bode well for the defence and financial sectors. Here are edited excerpts of the interview:

When do you expect the Nifty 50 to reclaim the 26,000 mark? Are there any fresh catalysts that could drive the market higher?

The Indian stock market has been experiencing strength recently, backed by positive economic growth and better-than-expected fourth-quarter results.

We could see a positive structure for the indices playing out, considering the liquidity in the capital markets continues to be fairly buoyant and the continuation of steady growth in the Indian economy.

Do you see signs of sector rotation in the market? Where is smart money flowing to?

Sector rotation tends to be a perpetual action in every phase of a market cycle.

The liquidity seems to be positioning towards market segments like defence and financials in this leg of the up move.

The indigenisation process and liquidity measures undertaken by the regulators will bode well for the defence and financial sectors, respectively.

What should we prefer at the current juncture- growth or value?

In the current market scenario, portfolio positioning has to be a function of both underlying growth and relative attractiveness in valuation.

We are in an ambivalent market environment that requires the right balance between different styles to ensure an optimum portfolio that ensures effective risk management and return generation.

How do you see RBI's latest policy decision and projections on growth and inflation? What does it mean for the market?

The recent decision to implement a third consecutive rate cut this year, with a fifty basis point reduction instead of the anticipated twenty-five basis points, is a positive and strategic move.

This action reflects an intentional frontloading of rate cuts, supported by the country’s consistent economic performance and easing inflationary pressures.

The shift in the policy stance from accommodative to neutral is a prudent adjustment, as it provides the necessary flexibility to balance fostering growth in light of ongoing geopolitical uncertainties.

The current policy measures are designed to enhance consumer spending, spur domestic economic activity, and maintain adequate liquidity amidst the complex global challenges.

A combination of fiscal and monetary measures leading to robust liquidity in the system would bode well for the economy and the financial markets.

FPI inflow is diminishing. What could be the reason behind it? Can the trend sustain?

The aggressive nationalist measures enforced by the Trump administration led to foreign investors' impulsive withdrawal of capital from the United States. 

However, a multitude of measures, such as Tariff wars and the US government's onshoring of manufacturing, would hurt the profitability of companies in the USA and, in turn, have a structural effect on the country's financial markets. 

This would lead to foreign money flowing into other markets, especially emerging markets like India, where growth visibility and the structure of the economy are positively evolving. 

This process would be gradual in nature and will start reflecting in the numbers in the long run.

What should be our equity investment strategy for the next one to two years?

On a broader theme basis, it would be prudent for domestic investors to stick to domestic-led themes in their portfolio, which would ensure alignment with stable growth visible in the Indian Economy. 

As far as the export-led market segments are concerned, select pockets of growth could be attractive on a case-by-case basis. 

However, a sharp slowdown in some of the developed markets could dampen growth in the medium term for the export-oriented segments.

What is Momentum? How does SAMCO MF use the momentum strategy to benefit its investors?

Momentum is an investment strategy that focuses on the idea that assets that have performed well in the past will continue to perform well in the future. 

This strategy is backed by the hypothesis that trends tend to persist over time due to factors like market sentiment, investor behaviour, and economic forces. 

We at Samco Mutual Fund are harnessing the power of this strategy to construct portfolios backed by quantitative and behavioural market data. 

Our strategy is built on a data-driven approach that filters out underperforming market segments and focuses on those with sustained positive momentum. 

We use advanced proprietary algorithms which consider price movements, volume shifts, money flows, sectoral data and other key market behaviour indicators to construct a differentiated portfolio for investors across market segments and themes.

Read all market-related news here

Read more stories by Nishant Kumar

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.