Sensex may hit the 81,000 mark by 2024-end: Ravi Singh of Religare

Indian markets in focus: The outlook for Indian markets appears robust and optimistic amid current economic conditions and policy expectations. Ravi Singh, senior vice president of retail research, Religare Broking in an email interview sheds light on various sectors set for growth, the impact of global economic trends such as potential Fed rate cuts, and strategic opportunities for investors looking at medium to long-term prospects. Edited Excerpts:

How do you see the stock markets at current levels? Is there any sector which is overheated?

Markets are showing strong momentum, with Nifty firmly holding above the 23,300-mark, indicating that bulls are in strong control. If Nifty manages to close decisively above the 23,600 level, we could see it reaching 24,000 in the near term. However, one must be cautious in the real estate sector as we may see some profit taking in the near term.

How do you anticipate the Indian markets to perform under Modi 3.0? What is your one-year target for Sensex/Nifty?

We are very optimistic about the performance of Indian markets under Modi 3.0. The continuity in government policies is expected to drive strong economic growth and market performance. We anticipate that the Nifty could reach the 24,500 mark by the end of the year, while the Sensex could inch to 81,000 levels.

FIIs have started buying again. What factors do you think changed their strategy?

The key factor behind the FII buying spree is the return of the BJP-led government, which promises policy stability and continuity. The government's track record of implementing business friendly policies has strengthened investor confidence.

What's supporting DII optimism despite Indian equities being pricier?

The optimism among Domestic Institutional Investors (DIIs) is largely driven by robust inflows from Indian retail investors. The substantial and steadily increasing investments through mutual funds have compelled DIIs to invest these funds, even in highly valued equities. This sustained inflow reflects the growing confidence of domestic investors in the Indian market's long term potential.

After projecting 3-4 rate cuts this year, Fed's dot plot suggests just one cut in 2024. Will there be any negative surprises on this front? If not, when can we see the first Fed cut?

We believe that the first rate cut by the Fed could occur by September this year. The Fed is likely to closely monitor macroeconomic data, including jobless claims and new home sales, before making further rate decisions.

How will Fed's rate cut impact India and other EMs?

A Fed rate cut will positively impact India and other emerging markets. Lower interest rates in the US make EMs more attractive for foreign investments due to the higher yield differentials. As a result, foreign institutional investors are expected to divert more funds to emerging economies like India, boosting liquidity and potentially driving up asset prices in these economies.

At current levels, which sectors do you consider promising from medium to long-term investment?

From a medium-to-long term perspective, we see significant promise in sectors such as Defence, Banking, Infrastructure, Railways, and IT. These sectors are well positioned to benefit from ongoing government initiatives. Investors should focus on fundamentally strong stocks within these sectors for the longer time duration.

Are infrastructure, banks (private, public), defence stocks still favourable options for long-term investors, and what should be the trading strategy?

Yes, infrastructure, banking (both private and public), and defence stocks remain favourable options for long term investors. These sectors are expected to benefit from continued government spending and policy support. One should utilise any sizable dip in these counters for accumulating.