“Hindenburg’s accusations won’t stop the ongoing bull market”

Kranthi Bhatini, chief equity officer of WealthMills Securities

3 minutes of reading Last update: August 12, 2024 | 11:43 AM IST

It was an eventful weekend when US short-selling firm Hindenburg Research accused Sebi chairman Madhabi Puri Buch of involvement in the Adani group case. KRANTHI BATHINIdirector of equity at WealthMills Securities, told Rex Cano in an interview that he continues to recommend equity as his preferred asset class with a significant allocation to large-cap stocks. Edited excerpts:

How do you interpret the latest Hindenburg report? Could events derail market sentiment if things get uglier?

What is your reading of the current market? Preferred sectors?

The Indian equity market has been resilient and has been recovering despite recent geopolitical concerns. The market has been able to withstand selling pressure supported by strong domestic liquidity flow and upbeat trade sentiment in the country. The latest corporate earnings for the June 2024 quarter also did not come with any negative surprises, creating a positive outlook for earnings. Sectorally, we prefer private sector banks, healthcare and consumer staples. Shipping and chemicals are better avoided in the medium term.

What potential risks could make investors more cautious about Indian stocks?

The equity investment culture in India seems to be developing similarly to the West. Most of the young investors, the so-called Generation Z, are looking for long-term investments and are convinced about the growth of the Indian economy. DIIs are also flush with liquidity. Any global slowdown, US recession or unstable geopolitical environment can make these investors cautious about investing in equities.

Do you see the impact of higher short-term taxes, new derivatives/F&O norms on market sentiment and volumes?

We do not see much impact from the near-term CTG hike in the market as equity returns in India are attractive from both a short-term and long-term perspective compared to other relative asset classes. The new F&O trading norms will have some impact on retail volumes in the derivatives segment, but we need to see at least a few quarters to assess the actual impact.

What advice would you give to investors in times like these? Any safe havens where investors can seek refuge?

There is a complete divergence in this market. High PE stocks remain at such stratospheric valuations due to strong corporate earnings and solid liquidity flows. Mid and small cap stocks have also been resilient despite high valuations. It is more of an equity market than a sector market at the moment. That said, valuations in pharma, healthcare, FMCG and private banking seem attractive; while insurance stocks seem reasonably valued in the medium term, as do defensive stocks. Select defensive stocks can be accumulated during downturns due to earnings visibility.

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In terms of diversification, what other assets are worth investing in, say for a 3-5 year period?

We would recommend equities as the preferred asset class with a significant allocation to large cap stocks; and a timely rotation into mid caps/sectors as key to generating alpha in the stock market. In addition, gold and silver investments can help an investor thrive in a low interest rate environment.

First published: August 12, 2024 | 11:32 AM IST