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Rohan Mehta, CEO and Portfolio Manager of Turtle Wealth, is certain that the Nifty50 will reach 21,000 by the end of the fiscal year.
His conviction is based on the regular interactions with five management teams each week. All of whom demonstrate a strong bullish sentiment towards the country, he said in an interview with Moneycontrol.
Mehta, with 17 years of experience in capital markets, believes that the FMCG and chemicals sectors have limited growth prospects for the next one or two years. These industries have high valuations and limited expansion options.
What are your themes for investment?
The Nifty index has increased by 25 percent from its recent low, and it seems to be taking a break now, indicating a brief consolidation. When the market is expanding and the underlying stocks are doing well, it’s a strong bullish sign that shows investors have confidence in the market. At this stage, industries that are undergoing significant investment have an advantage because it plays into the capex cycle.
Capex cycles, where value exceeds price and reflects potential gains, are surrounded by optimism. The state of the market at the moment supports this trend. Public sector enterprises (PSUs), power, non-banking financial companies (NBFCs), and flourishing unusual businesses continue to inspire enthusiasm.
The market’s short-term trajectory is expected to be positive due to sector-specific dynamics and the connection between market movement and underlying stock performance, as highlighted by this outlook.
Also read: Defence, railway rally just beginning, stocks may rise for next 5-7 years: Vijay Kedia
What is your Nifty target for the fiscal year?
Based on our conviction and regular interactions with five management teams each week, all of whom demonstrate a strong bullish sentiment towards our country, we are certain that a Nifty50 level of 21,000 will be reached by the end of this fiscal year.
Within the next two years, revenues are expected to double during the upcoming capex cycle. We are certain that we are starting what could be the most significant bullish market phase of this decade given the strong trajectory of the earning cycle.
What are the two key factors that can create a strong base for equity markets going ahead?
1) Earnings Dominance: In the end, income is still the most important variable. Whatever the topic, solid and consistent earnings have the ability to influence outcomes. Positive and consistent earnings increase the likelihood of a favourable trajectory.
Also read: No surprise if markets take a breather in next few months: Motilal Oswal
2) Re-Rating’s Influence: When considering the service cycle over the past ten years and the current uptick in the capex cycle since 2021, an intriguing phenomenon becomes apparent. Businesses that maintained price stagnancy over the previous ten years have now attained increased value despite their unchanged price levels. There is a chance for a significant re-rating if these businesses move from their current growth trajectory. Their market value might then double as a result of this re-rating, dramatically altering the competitive landscape.
Which are the two sectors that are looking overpriced now?
For the next year or two, growth prospects are currently limited for both the FMCG and chemicals sectors. These industries have high valuations and few expansion options. Unless a company introduces disruptive innovation through new products or innovative business models, its growth trajectory appears uncertain.
Without such game-changing innovations, these industries’ growth prospects appear to be limited to a small range and devoid of the drive needed to make significant progress.
Is it the right time to take exposure to AI-related stocks?
Indeed, discussing the allure of innovation is enticing, but historical evidence underscores the unpredictable nature of innovative ventures and their associated risks. The pursuit of innovation involves an uncertain race, with winners not always clear until the finish line. Contrarily, history reveals that seemingly unremarkable ventures often yield substantial profits with lower risk profiles.
Also read: How RIL became India’s largest bio-energy producer and what does it mean?
The notion that letting innovation mature into revenue generation is prudent is sound. Patience allows innovations to navigate challenges and evolve into stable revenue streams. Notably, investing luminary Warren Buffett’s decision to enter Apple’s market at $900 billion rather than $1 billion highlights the emphasis on safety and long-term gains. This choice eventually resulted in over three-fold returns.
The key takeaway is that no opportunity is truly missed. Opportunities abound in both dynamic and traditional markets. Ultimately, investing wisely necessitates balancing the allure of innovation with the reliability of established ventures, taking into account risk tolerance and long-term goals.
What are the three things that help you decide investment strategy?
Investing preferences can vary widely among Portfolio Managers. The outlined criteria for investing encapsulate a unique strategy:
1) Historic High Consolidation: You prioritize stocks that have reached their all-time highs (ATH) after undergoing a prolonged period of price consolidation spanning a decade or more. This strategy leverages the idea that a sustained consolidation phase can set the stage for a significant breakout and growth potential.
2) Robust Financial Metrics: The requirement for both top and bottom lines to be at ATH emphasizes your focus on companies demonstrating strong financial performance. This criterion underscores the importance of consistent revenue and profit growth as indicators of a company’s fundamental strength.
3) Turnaround Narrative: Your interest in stocks with turnaround stories showcases a preference for companies that have overcome challenges or disruptions to embark on a path of recovery and revitalization. This approach seeks to identify undervalued assets with the potential for significant resurgence.
Your strategy reflects a blend of technical and fundamental analysis, combined with a keen eye for market narratives. Each criterion aligns with distinct investment philosophies, collectively shaping a unique approach that seeks to capture opportunities at the intersection of technical momentum, financial health, and compelling growth narratives.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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