It's The Best Time To Invest In Debt, Says JM Financial's Vinay Jaising
A short-term inflow into the debt market is expected once the interest rate cuts take effect, contributing to support for the equity markets, he says.
There can be an inflow of $25 billion into India's bond market from June after the country's inclusion in the JPMorgan Government Bond Index-Emerging Markets, according to Vinay Jaising of JM Financial Ltd.
A short-term inflow into the debt market is also expected once the interest rate cuts take effect, contributing to support for the equity markets, Jaising, the co-head of portfolio management services at JM Financial, told NDTV Profit in an interview.
According to him, this is the best time to inject money into the debt cycle. After this, a significant amount of money is expected to flow into the equity cycle incrementally, according to Jaising.
He highlighted that the market is currently experiencing a "healthy correction" and there had been an upswing in the last 40–45 days.
The MSCI India Index experienced an over 3% rise, the small-cap index witnessed a rise of 4–5%, and even the large caps are showing an upward trend, according to him.
On a year-to-date basis, the MSCI India has surged 3.62%, while the S&P BSE SmallCap witnessed a jump of 6.18%, according to Bloomberg data.
Positive Outlook
An average scenario predicts a 15% increase in earnings for the current financial year and there is a positive outlook with "not much of earnings pain", Jaising said.
In a worst case scenario, if the price-to-earnings ratio is sustained and elections align with expectations, the earnings trajectory could dip to 10–11%, he said. On the bullish side, it might surge to 20%, according to Jaising.
Pocket Of Opportunities
Railways, public sector banks and defence stocks are all considered long-term investment opportunities, he said.
"Defence PSUs will excel amid geopolitical risks, and the defence budget is not decreasing," Jaising said, highlighting that these companies are actively involved in exporting their products.
In terms of public sector banks, he cited their digitisation initiatives and said their valuations are relatively more affordable. "We are confident that some of these public sector banks will outshine."
The capital expenditure in the railways surged sevenfold over the last decade, Jaising said. There is an expectation of substantial changes in order executions within this sector, he said.
