Capital Mind

Nov 29, 2023

Midcaps and smallcaps will continue to drive the rally upwards: Deepak Shenoy Deepak Shenoy , Founder, Capital Mind , says “in the last two months or so, largecaps have been net negative, and so I do not expect them to carry forward. If they were coming in, the largecaps would be the ones to rally but I continue to think local domestic money that is coming in mid and smallcaps will continue to fuel, it if it has to keep going ahead.” For the market to push up higher, unlike Tuesday when the Adani Group of names, OMCs, ONGC , held out, what is going to lead the next move on the index? If I knew, I would probably put all my money on it, but at this point the financials are going to remain a little dicey. They would not be leaders going forward. But we do expect some activity in terms of retail participation coming back and driving more domestic oriented stocks and largely I still think the midcaps and smallcaps continue to drive the rally upwards. There is a lot more money. There is domestic money that is flowing into the markets. Foreign investors are actually not net positive. Unlock Leadership Excellence with a Range of CXO Courses Offering College In the last two months or so, they have been net negative, and so I do not expect them to carry forward. If they were coming in, the largecaps would be the ones to rally but I continue to think local domestic money that is coming in mid and smallcaps will continue to fuel, it if it has to keep going ahead. From a sectoral perspective, the month of December tends to really be positive simply because of the historical activities that December is one of the best months of the year. So, I do not know which particular sector will probably drive it but from January onwards, results will show us how good the Diwali season is and if Diwali was really good in terms of earnings, we should see the consumer durables or the staple sector start to take more weight in the movements going forward. Since we have got a very near-term trigger that is the state election verdict also which is out on Sunday, we are going to react to Monday. Is the market really going to react to that or do you think much of it is in the price? Actually, I do not know so much about politics or whether it will affect the stock prices but honestly, economics has been beyond politics for the longest time. I do not think anybody is going to come and disrupt what somebody in the past has done even if there is a change in government or something like that. So, I do not think this is so major but then markets behave very differently, respond to news very differently and in the past we have seen politics cause a down circuit and an up circuit but typically at the central elections or the parliamentary elections level. You Might Also Like: But I do not think this election changes something fundamentally. With the caveat that, of course, if the Left forms the government in many of these states, then there could be an issue because they have relatively more aggressive political thought processes but beyond that, it should not change anything economically. Any fall in the index should be welcome as a buying opportunity if it is purely on the politics. What about the entire manufacturing and Make in India theme? Dixon, Amber, Syrma SGS and now the trigger word seems to semicon because anybody who is getting into semiconductor is just seeing their stock rallying 15% to 20%. Actually that is a little scary for me because if you remember the dotcom boom, everybody started changing their names to dot com. The stock prices would go up 10-20%. Now you will find this in AI, suddenly people will start talking about AI, semiconductors and their stock will go up. These kinds of things are not usually very good because they indicate a lot of froth. Though the people who seem to have made the announcement right now seem to be serious players and we own some of them that have actually started operations or are doing something in this space already. I think the whole Make in India theme itself has a lot more to come. We are in the early stages of manufacturing. In railways, India does not manufacture more than 50% of the effective supply chain, although we are one of the densest, relatively more dense railway networks in the world, across India we have a fairly large reliance on passenger and freight travel on railways and yet not much is manufactured here. You Might Also Like: So, while the Make in India theme started two years ago, I think the next decade is going to be huge on manufacturing both high precision and consumable parts of the manufacturing ecosystem, largely business to business for now. Eventually some of these will become brands as well but the best is yet to come. We are very heavy on this and so very biased, but I am very positive that this will surge quite substantially in the future. You Might Also Like: