Markets poised for record highs despite election uncertainty, says Bonanza Portfolio's Achin Goel

As India gears up for general elections, Achin Goel, Vice President of Bonanza Portfolio, sees a bright future for the stock market. “As the voting for general elections has commenced in a phased manner, the markets have shown a strong recovery from the lower levels and the benchmark indices are poised to scale new life high. Moreover, the markets have factored in that BJP would return to power, the important aspect which is unknown remains the number of seats,” says Goel, in an exclusive interview with Bizz Buzz. He also discusses current trends, the impact of global events, and promising sectors for investors

What are the current trends in the Indian stock market?

As the voting for general elections has commenced in a phased manner, the markets have shown a strong recovery from the lower levels and the benchmark indices are poised to scale new life high. Moreover, the markets have factored in that BJP would return to power, the important aspect which is unknown remains the number of seats. Many sectors have contributed to the move with the auto moving into gear having seen improved monthly sales, metal stocks have gained as global prices are expected to see an uptick and recently in light of strong results, private banks have been the outperformers. Further, the realty sector has shown strong gains on the back of robust sales, improved demand, and new projects significantly improving the outlook on the industry. Importantly, on the domestic front, there are no visible obstacles to growth fueling optimism among investors.

How has the global geopolitical events impacted the stock market in recent months?

India's economy has shown strong growth despite global issues, mainly due to cash inflow from domestic investors. The revised GDP estimate of 7.6 per cent clearly highlights the resilience of Indian equity markets, resulting in a bullish sentiment. FII flows are expected to increase, and there is ample liquidity waiting to enter the market. While there may be a short-term slowdown, the long-term trend remains optimistic. However, there may be some impact on India's exports due to the global tensions, at least during the first quarter of FY25. This could lead to a demand slowdown, resulting in a longer payment period for foreign buyers. Nevertheless, both global growth and trade volumes are projected to accelerate in the future. We expect the Indian economy to achieve healthy growth throughout the year.

Which current high-growth sectors in India do you see maintaining momentum throughout FY25?

Infrastructure: Increased government spending on infrastructure projects like roads, railways, and airports creates opportunities in related industries like construction and engineering. In manifesto also BJP have given emphasis on infra development.

Defence: The defence ministry mentioned that 98 per cent of the total procurement worth Rs 2.23 lakh crore announced recently, will be sourced from the domestic industries and that move will give a substantial boost to the Indian defence industry in achieving the goal of 'Aatmanirbharta' (self-reliance) in defence industry.

Metal: The metal space has a lot more room on the upside. Speaking of metal names, JSW Steel, NMDC, and Hindalco are some stocks that look attractive. Whether they are metal steel or aluminium players, all three of them do. Consumers and wholesalers have low metal supplies at the beginning of 2024 due to muted demand expectations. But there have been noticeable indications of a revival in demand in 1QCY24, which has prompted restocking ahead of a traditionally robust 2QCY24. China's GDP expanded by 5.3 per cent y-o-y from January to March, above forecasts. Demand for metals remains low globally, with the exception of China; nonetheless, the sequential improvement suggests to a possible bottoming-out of both the price and demand for metals.

Renewable Energy: The ongoing shift towards clean energy presents opportunities for companies involved in solar, wind, and other renewable technologies.

Considering the current market trends, how does your company adapt its services to meet evolving investor needs?

We are always watchful for any kind of correction in the stock market and ensure that our investment remains safe all the time. At the time of severe correction occurred in the month of March where mid and small caps corrected post SEBI disclosure mandates, we were cushioned from the effect as we tapped into a few large cap to mitigate the risks. Currently, the market is treading on bullish trend which is a good thing for us as it gives us a good breathing space to make sense of the situation on a macro level and how we can tune our portfolio. In the current trends, with investors concerned about the correction and the elections, we are focusing more towards theme which will be focus of government post-election like, renewable energy, infrastructure, defence, manufacturing, etc.

Tell us about your views and strategies for small and midcap stocks.

The mid and small-cap space offers high growth potential due to the presence of young companies with room for expansion. However, this segment is known for its volatility, meaning stock prices can fluctuate significantly. Some industries in small and mid-cap space offer optimistic long term outlook such as industrials, power and allied industries, investment services and defence. This is a good time to focus on companies in the mid and small cap space where valuation is justified regardless of profit booking in some of them and ignore companies which are highly valued due to news and speculation. Our strategies for small and midcap stocks are based on ongoing and future growth potential which can generate good value in the long term. We constantly monitor the market for any upcoming gems based on certain selection criteria as well as on theme or the sector which has some trigger point for future. With robust stock selection and continuous monitoring, our PMS has given tremendous return to the clients. Our ‘Bonanza Edge’ and ‘Bonanza Value’schemes have delivered 81.9 per cent and 79.6 per cent return in 1 year, respectively and 47.1 per centand 26.4 per cent CAGR return in the last 3 years, respectively.