Even as the growth style of investing delivered fabulous returns in Calendar 2020, during which Nifty shot up 14.9 per cent, value stocks have come to dominate in the last two quarters. Nifty has gained more than 21 per cent in the past six months, but has been moving sideways with a negative bias in the past few weeks.
“This moderation is making the market more resilient. We cannot say that the market is now in overbought or hope mode. In fact, the market is more like a pendulum where on one side an increase in Covid infections, deaths and chances of lockdown are impacting markets and on the other side, there is hope that mass vaccination will help ease the situation. Fiscal and monetary stimulus will ensure that economic activities do not get impacted by Covid-19,” Nilesh Shah, Managing Director at Kotak Mahindra AMC, said in his monthly market outlook.
His call is to remain neutral weight on equity from both valuation as well as momentum points of view. “We are marginally overweight on smallcaps and midcaps and marginally underweight on largecaps,” he said.
Value investor Vijay Kedia reminded investors that the days of making easy money are gone. “If there was an opportunity to make money in 50 shares in 2020, it has now been reduced to five. We had a relay race in which all sectors participated one by one. By now, more or less every sector has participated,” Kedia told ETMarkets.
His guesstimate is that Nifty50 will move sideways in 2021 and will fluctuate in the 14,000-16,000 range.
Can one make money if the index remains range-bound?
“Individual midcaps may do well, but not the index. The movement of individual shares will now depend on earnings. Narrow down your expectations and do the hard work as it is not going to be a cakewalk anymore,” said Kedia.
Dalal Street’s top PMS fund manager Saurabh Mukherjea, a strong proponent of consistent compounding style of investing, is the one who said he is willing to buy any dip in the market to buy his favourite
stocks. “We will buy consistently,” he told ETNow last week, adding that he will buy more, especially if the correction goes a little deeper.
Mukherjea argued that the Covid dislocation had helped well-run high quality companies gain massive market share. “So, even if we go through a mini-dislocation over the next two- three months, once again we will see the pattern repeat where market leaders such as Titan, Asian Paints, Nestle and HDFC Bank will grab market shares,” he said.