The correction that we have seen so far can be largely attributed to the global factors although the imposition of the long-term capital gains (LTCG) can also be blamed for massive outflows seen in the equity markets.
But, a major shift could happen if there is a sentiment change with respect to the outcome of the upcoming general elections which could lead to a bigger correction in markets.
“One of the big triggers for a sentiment change on D-Street could be the perception of the outcome of elections which are around the corner. We have 8 elections this year and we have already seen some reversal in polls from Rajasthan for the BJP,” Pradip Shah, Founder & Chairman, IndAsia Fund Advisors said in an interview with CNBC-TV18.
“People have pinned a lot of hopes on PM Modi and his initiatives but at the end of the day if the sentiment gets weaken based on election results or trend of the public opinion could lead to correction or drop in the market,” he said.
The market is likely to witness selling pressure ahead of March 31, 2018, on account of LTCG. The key here is to look at individual companies and remain sector agnostic.
“I think there are plenty of opportunities are there in pharma space which has corrected significantly and the perception is that Indian pharma companies will not be able to get into US markets. But, I think that in order to lower down the medical cost US companies will have to come to India,” said Shah.
Similarly, IT sector is also looking a preferred play. The Indian companies are relying on their core strength that is giving solutions to their clients and clients are now realizing that Indian companies have the ability to provide solutions.
Similarly in the consumer product section. There will be plenty of demand for consumer durable, consumer so on. I am very optimistic about India, said Shah.
Commenting on the earnings growth, Shah said leading companies could grow between 11-20% in FY19.moneycontrol