Sensex: Nifty may slip to 16,800 levels and Sensex to 56K; use dips to buy in these 5 sectors: Ravi Singh, ShareIndia – Blue Barrows

“Interest rate hikes by the global central banks have strengthened fears of recession while inflation still remains high in the global economy,” said Ravi Singh, Vice President and Head of Research, ShareIndia. In an interview with, Singh said he is highly bullish on the auto sector and his top picks are , , and . Edited excerpts:

Indian equity indices saw a sharp sell off during the fag-end of the week. What dented the sentiments for the domestic stocks?

Indian equity markets took cues from the weakness in the US market after the 75 bps rate hike by the Fed. Apart from the US Federal Bank, central banks in Britain, Switzerland, Sweden, and Norway also hiked interest rates.

These actions made fears of recession even stronger while inflation is still on the higher side. RBI MPC is scheduled on September 28-29 and the market seems to have already priced in a 50 bps rate hike.

The Rupee has hit a record low. Will this trigger another round of selling by FIIs?
FIIs have already sold Rs 5,870 crore worth of securities since the Fed’s rate hike in just 3 days. Increase in US 10-year bond yields and a strong dollar makes the US markets attractive leading FIIs to leave emerging markets. This selling might continue in near-term also.

IT stocks have been struggling to gain momentum. What is your outlook on the sector amid a weakening rupee? Are there any other sectors, which may see a silver lining amid the falling rupee?

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IT stocks are struggling for quite some time. , , , and HCL have fallen 20-45 per cent in the last 6 months. A weakening rupee might provide a silver lining to the IT sector to some extent but when the fundamentals are not so strong, it will not help much.
A high percentage of IT sector revenues comes from the USA and other developed countries. The IT sector could face headwinds from weakening demands in these developed countries.

There are other sectors that benefit from weakening rupee such as pharma, auto exporters, oil refiners and exporters, chemical companies and textile exporters. A weakening rupee makes their products cheaper in foreign markets.

Ahead of the festive season, what is your outlook on auto stocks as some of the top names are coming out with mega launches? What are your top picks from this sector?

I am very optimistic on auto stocks. Auto companies are seeing a surge in demand, especially in the EV segment. In four-wheelers, Maruti may lead in sales numbers during festive season. In the two-wheelers segment, TVS and

may see a jump in demand. In the heavy vehicles segment, would be the leader. My top picks would be Eicher motors, TVS, and Maruti.

Do you think that the worst is over for Indian markets or is there more pain left? In which sectors do you see value in the near term? How should investors approach the current market to make most of it?

Compared with developed countries, Indian markets have been quite resilient and haven’t witnessed the fall that other markets are witnessing. Government reforms and policies have been a big support to the Indian market encouraging economic growth and boosting investors’ confidence.

However, Nifty may see a further dip towards 16,800 levels and Sensex to 56,000 levels in the current scenario. Investors may consider this fall as an opportunity to pick value stocks from auto, FMGC, IT, banking and power sectors. Investors should divide their investment into three parts starting from current levels till lower levels of Nifty.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)