Daily Voice | Expect first rate hike by RBI in second or third quarter of CY22, says Sharad Chandra Shukla of Mehta Equities

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Sharad Chandra Shukla, Director at Mehta Equities says they expect the first rate hike by Reserve Bank of India in the second or third quarter of CY22, but a lot will obviously depend on the crude behaviour and the commodity cycle.

On Star Health listing, “there is a high probability of a discount listing of Star Health due to factors like valuations slightly on the higher side, negative earnings status, low bottom-line margins followed by highly competitive markets which did not go with investors’ expectations,” said Shukla who has more than two decade of experience in Indian mutual fund industry as well as equity capital markets.

What do you expect from the RBI monetary policy scheduled to be held next week? Do you expect the central bank to maintain status-quo rates till 2022?

The stance of the RBI monetary policy will continue to remain the status quo. Inflation is a matter of concern but at present, we feel it is within manageable limits. It is a tough task for RBI to control inflationary expectations on one hand and simultaneously also not impact economic growth.

We expect the first hike in rates in the second or third quarter of CY22. We expect the rates would harden by about 50bps in CY22. A lot will obviously depend on the crude behaviour and the commodity cycle.

Do you expect further growth in industrial output in October 2021 after 3.1 percent growth in September 2021?

The industrial segment is recovering and the growth rates should pick up going forward and we expect the momentum to continue. The CAPEX cycle has just started. But what is reflected on the ground is that only government is investing and the private sector is yet to participate.

But going forward we see that the private sector will join hands in capacity creation. Several industries are running on high capacity utilisations. In the last few years corporate sector has focussed on deleveraging balance sheets and are currently in a position to invest and ride the growth cycle.

Also read – Primary market buzzing with activity as 4 IPOs hit the Street next week. Check out all the details

Do you think the lower than expected IPO subscription figures will dent the listing of Rakesh Jhunjhunwala-backed Star Health next week? Will it mirror the listing day performance of Paytm?

There is a high probability of a discount listing of Star Health due to factors like valuations slightly on the higher side, negative earnings status, low bottom-line margins followed by highly competitive markets which did not go with investors’ expectations. We are optimistic about industry prospects for the long term only as future demand looks promising for the health insurance industry looking at demographic factors such as growing middle class, young population and growing awareness of the need for protection planning will support the growth of the sector.

Also read – Shriram Properties IPO price band set at Rs 113-118 per share

However, retail investors should understand making money was an easy task in the last 18 months, it is time to be bottoms up and not take a top-down approach which requires in-depth research and professional expertise. Also, new generation tech companies not making money but transforming the marketplace with disruptive models should not be ignored by the investors. Several of these App-based companies will be the future blue chips in times to come.

Also read – Rakesh Jhunjhunwala-backed Metro Brands IPO opens on December 10, closes on December 14

Are you bullish on RateGain Travel Technologies and is it rightly priced at Rs 405-425 per share?

At this juncture, the issue appears to be aggressively priced on negative earnings status and may generate interest in investors for first-mover advantage post listing. The economy is opening up and we believe the travel and hospitality segment will grow faster than expected and the RateGain business model is well placed to gain more demand going forward.

Also read – MapmyIndia IPO opens on December 9, issue closes December 13

Overall negative earnings status is a concern as of now, but future growth prospects are optimistic in nature. Only risk-seeking investors can consider subscribing to the IPO with a long term perspective only.

Do you expect the market to close the year above the 18,000 mark on the Nifty50, and why?

The market is unlikely to close above the 18,000 mark in December 2021. We are in a bull market and this is the first major correction of about 9 percent in the last 18 months. The market may consolidate at the current levels. But with the expectation of a 20-25 percent earnings CAGR for the next 2-3 years, the bull rally has all the characteristics of sustaining in the coming months.

This is also a time when equity cult is spreading in India. Retail participation which was lacking in last few decades is now one of the dominant forces in the market. The mutual fund awareness program has also resulted in a steady from of funds through the SIP route.

Do you think the Omicron issue will hit the market sentiment more or after some time the market will ignore this reason?

The new mutant has just emerged, and much data is still not available. The stock market were due for a correction and so Omicron became a reason. The world will have lived with the virus and we have seen in several industries hybrid models have emerged to grow the business. The impacted sectors will find a way to get around with newer growth strategies.

However, retail investors should understand making money was an easy task in the last 18 months it is time to be bottoms up and not take a top-down approach which requires in-depth research and professional expertise. Also, new generation tech companies not making money but transforming the marketplace with disruptive models should not be ignored by the investors. Several of these App-based companies will be the future blue chips in times to come.

Q: Metal was the biggest loser with 13 percent loss in the last one-and-half-month, and other key sectors like Auto, Bank, Energy, Financial Service, and Pharma declined 6-8 percent. Is it time to go overboard on these sectors and what are the stocks to buy now after recent corrections?

We continue to be bullish on the Metals, Autos, BFSI sector. The fortunes of the metal sector are linked the global markets and by next year we expect the world economy to fully recover and world demand will drive prices. BFSI sector has very good prospects as the levels of penetration in every segment of the financial market has a huge opportunity to be tapped. Strong and well managed companies in the BFSI space can be consistent wealth creators for the next decade to come. But from time to time there will be disruption and business models will have to evolve.

In Auto few segments like commercial vehicles are coming out from the down cycle and will show the upwards trend for few years. The cars & Tractors segment are also recovering post-pandemic impact and will show better numbers. The two-wheelers segment is getting challenged by the electric evolution but the existing players are in the phase of transformation.

Pharma segment focussed on US generic opportunity has a long-term opportunity to be addressed as the developed nations want to cut down on the ever increasing health cost.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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