The Nifty 50 crossed the 20,000 level for the first time intraday on Monday after the G20 weekend.
India's benchmark stock indices advanced for the seventh straight day to log the best stretch of gains in 11 weeks from June 26 to July 6, when the indices advanced for eight days. The Nifty rose over 1% intraday to hit 20,008.15 on Monday.
But what now?
'We Happen To Be Living In The Right Country'
Siddhartha Bhaiya, Aequitas Investment
"We happen to be living in the right country at the right time," said Siddhartha Bhaiya, managing director and chief investment officer at Aequitas Investment, adding that he was bullish on India’s growth story in the long term.
The government’s spending on infrastructure as well as the capex cycle has just begun, and it is expected to drive the economy going forward.
"The economy is on a very sound footing. We should continue to do well going forward," he said. At the same time, he asked investors to be cautious of a possible bubble.
"In six months, the small-cap index is up 40%. At this time, caution is warranted for sure," he said. The number of opportunities available right now is far less than it was a couple of years ago.
'A Pit Stop, Real Bull Story Yet To Unfold'
Vikas Khemani, Carnelian Asset Management
"What we have seen is just a trailer; the real movie is about to happen," said Vikas Khemani, founder of Carnelian Asset Management. "I would say that this is a small pit stop in a long journey. The real big bull story of India is yet to unfold."
The Indian markets are experiencing a well-diversified, sustainable growth trajectory after a long time, he said. Khemani said investors are now spoilt for choice, with everything being reimagined in the context of domestic demand and export potential. "We can look at banking, automotive, manufacturing, infrastructure, IT, everything."
Although there will be periods of consolidation and correction in the market, the Indian market is poised for sustainable growth. The breadth of participation is so broad this time around that wealth will be created in multiple ways.
"Post-election, we will see an avalanche of global capital coming to India," said Khemani. "Fortunately, now I don't see any bubble within the Indian economic space, I do not see any major risks either at the market level."
'Can't Fight The Momentum'
Andrew Holland, Avendus Capital Alternate Strategies
Andrew Holland, CEO of Avendus Capital Alternate Strategies, said one can’t fight the momentum, but he does have concerns about the overbought territory that the momentum brings.
On large outflows entering large-cap stocks and whether this would facilitate a sector rotation, Holland highlighted how the banking sector had been underperforming for a while and has now picked up in terms of performance. "I will not say there is a sector rotation, but some of the sectors that have been underperforming in the large-cap space have started to perform," said Holland.
With concerns about the market being in the overbought zone, Holland did state that there could be factors that could take away the euphoria that the market is currently witnessing. He said, "There could be a lot of global factors rather than local factors, excluding political events in India (that) come to mind," Holland said. However, domestic risks could include the lack of monsoons pushing up inflation as well as expectations of interest rates not falling very quickly.
On expectations of the foreign institutional investor inflow, Holland stated that India is an easy pocket for foreign investors looking to turn away from China.
Since Holland manages a portfolio that takes both long and short positions in the market, he also stated the factors that could naturally encourage him to take a short position in certain sectors while the rest of the market seems to be going long. He stated that the oil and gas sector is a short-term positive in the Indian markets. If oil prices hit the $100-per-barrel mark, it would impact not only oil companies but also paint companies, making the stocks a natural short. Further, he also added that if China plays no part in adding stimulus and allows its currency to depreciate, then commodity prices, especially metals, could take a hit, hence making that sector a possibility for a short position.
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