General Elections 2024 next big trigger for markets; can't say interest rates have peaked, says Dikshit Mittal of LIC MF | Mint
Active Stocks
Fri Feb 23 2024 15:58:13
  1. Tata Steel share price
  2. 145.50 -0.24%
  1. State Bank Of India share price
  2. 759.40 -0.86%
  1. HDFC Bank share price
  2. 1,420.90 0.08%
  1. NTPC share price
  2. 337.70 -0.54%
  1. ITC share price
  2. 411.60 -0.65%
Business News/ Markets / Stock Markets/  General Elections 2024 next big trigger for markets; can't say interest rates have peaked, says Dikshit Mittal of LIC MF
BackBack

General Elections 2024 next big trigger for markets; can't say interest rates have peaked, says Dikshit Mittal of LIC MF

State elections can create short-term volatility, but the outcome of the General Elections 2024 is a key monitorable, says Dikshit Mittal, fund manager of LIC Mutual Fund.

Dikshit Mittal, fund manager of LIC Mutual Fund (LIC Mutual Fund)Premium
Dikshit Mittal, fund manager of LIC Mutual Fund (LIC Mutual Fund)

Dikshit Mittal, fund manager of LIC Mutual Fund believes while state elections can create short-term volatility, the outcome of the General Elections 2024 is a key monitorable. In an interview with Mint, Mittal said while interest rates globally seem to be near peak, there is no clear visibility on the timeline for interest rate cuts to begin at least for the next two quarters. Edited excerpts:

What is your near-term outlook for the market? Are we going to see low single-digit gains in Nifty 50 this year?

In the backdrop of global macro headwinds like elevated inflation, higher interest rates, geopolitical tensions, and muted global growth rates, Indian equity markets have witnessed a decent run in the last one year. 

However, it is difficult to predict markets going forward. Corporate profitability and balance sheets also remain in decent shape and the earning season so far has been decent with sectors like banks, automobiles, and capital goods posting good results. 

That said, investors entering markets at current levels need to keep a slightly longer-term view of the market as we are entering into a busy election period, which can create some short-term volatility in markets.

Also Read: India's economic resilience causing a strong influx of IPOs, says Mahavir Lunawat of Pantomath Capital Advisors

What are the next triggers for the market? How could the outcome of state elections and General Election 2024 impact the Indian market?

The next trigger for equity markets is the outcome of General Elections 2024. State elections can create short-term volatility, but the outcome of the General Elections 2024 is a key monitorable. 

In addition, the trend in global interest rates is key monitorable from an equity market perspective. 

Expectations of a 'higher for longer' interest rate environment have kept FIIs (foreign institutional investors) away from EMs (emerging markets), and any indication of topping out of interest rates may fuel global flows in equity markets. 

One also needs to keep a watch on the US economy, and in case evidence of a soft landing of the US economy emerges, that can be a significant trigger for equity markets.

Also Read: Not the whole mid, smallcap segment is expensive; positive about realty sector, says Mihir Vora of TRUST Mutual Fund

There is optimism that the monetary tightening has peaked globally. What are your views on it? When do you expect the Fed and the RBI to cut rates?

Global central bankers remain data-dependent, and it's difficult to take a call that interest rates have peaked. While US inflation has softened, it remains above the Fed’s 2 per cent target level. 

US GDP growth and labour markets also remain extremely strong, making a case for a 'higher for longer' interest rate environment. 

While interest rates globally seem to be near peak, currently there is no clear visibility on the timeline for interest rate cuts to begin at least for the next two quarters.

Also Read: Should you be worried about further rate hikes in the US?

The realty sector has seen sharp gains this year. How long will this momentum be sustained?

The Indian realty sector was engulfed with numerous macroeconomic shocks and demand side issues for a large part of the last decade. 

The effects of the macroeconomic shocks have receded, and demand has returned with fresh rigour. 

The fundamentals for the Indian realty sector seem bright both on the supply and demand side. 

On the supply side, the listed Indian realty players with a strong focus on the eight major markets have multiple launches planned on an annual basis for the next three to five years. 

Their retail and hospitality segment too has been ramped up riding on the premiumisation trend. 

On the demand side rising disposable income- especially on the top and middle of the pyramid, expected peak in domestic interest rates, preference for customised living spaces, and trend of increased consumer spending bode well for the residential, hospitality, and retail offerings provided by Indian realty players. 

There may be short-term hiccups, but the structural trend seems positive for now.

Share your views on the automobile sector. Is there more steam left in it?

India remains highly under-penetrated as compared to global standards, especially in four-wheeler private vehicles so to that extent longer term story looks attractive. 

We expect the two-wheeler and four-wheeler sectors to continue to do well and within these segments, there is a clear trend of a shift in consumer preference towards premiumisation, which is further reflected in average selling price increases and margin improvement. 

In the last two years, the constant velocity segment has also done well, but it is slightly more cyclical and depends on economic cycles and one needs to be agile while investing in this segment.

What sectors should retail investors buy in this market?

I am optimistic about the BFSI, capital goods, consumer discretionary and selective export-oriented stories from a medium to long-term view. 

The BFSI sector is a proxy for nominal GDP growth and is expected to be a beneficiary of the expected uptick in the capex cycle in India. 

The NPA cycle is behind, and banks can grow in robust double digits without any overhang of NPAs for the next few years. 

Looking at improved balance sheets of corporate India, rising capacity utilisation, coupled with government focus on Make in India and defence indigenisation is providing tailwinds to the capital goods sector, which is reflected in robust order books of companies. 

Finally, consumption is the evergreen sector in India, and with rising per capita incomes, disposable income in the hands of Indians is expected to grow at a rapid pace, which should reflect in rising spend on consumer discretionary items.

Read all market-related news here

Disclaimer: The views and recommendations above are those of the expert, not of Mint. We advise investors to check with certified experts before making any investment decisions.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Nov 2023, 11:23 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App