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Nifty target for 2019-end at 14,000; bet on top five large-cap stocks: Karvy

Karvy is of the view that the formation of a business-friendly government would help drive the next rally in equities. Our target for Nifty for December 2019 is 14,000,



We believe that the formation of a business-friendly government would help drive the next rally in equities. Our target for Nifty for December 2019 is 14,000, Rajiv Ranjan Singh, CEO, Karvy Stock Broking said in an interview with Moneycontrol’s Kshitij Anand.

Yes, as we have seen steady rollovers into December series, and positive news flow from G20 meet, especially trade war truce between the US and China, helping global markets to move on a stronger note.

With a slew of events such as US Fed meet outcome, RBI meeting lined up during December, indices are likely to be volatile. The Nifty is likely to trade in a broad range of 10,600-11,200 with a positive bias.

Do you think the pain in the mid and smallcaps is here to stay?
The mid and small-cap stocks tend to outperform when they are at a significant discount (at least 20 percent) to large-cap valuations, whereas they are at par now.
Market Tips and recommendations Follow Market Captains.
In the near to mid-term, we expect largecaps to perform better as mid and small-cap valuations are not yet favourable. Over the coming quarters, largecaps are likely to do better. The mid and smallcaps are likely to underperform until their valuations become attractive.
However, we believe that after mid-2019, with decent time correction, conditions may be favourable for mid and smallcaps to perform well.
After a muted 2018, what are your predictions for the year 2019?
We believe that a broad-based economic recovery is underway, and most importantly, capex spending is recovering. This should support corporate earnings and equity markets.
However, in the coming months, general elections remain an overhang. We believe that the formation of a business-friendly government would help drive the next rally in equities. Our target for Nifty for December 2019 is 14,000.
2019 strategy: Top five fundamental safe stocks which are good buys at current levels for a holding period of 1 year?
Our top 5 picks for one year are — HDFC,ICIC bank, ITC,L&T,and Maruti.
Which sectors are likely to hog the limelight in the year 2019?
Since we expect growth in the coming quarters to be led by capex spending, we favour cyclical sectors — banks, capital goods, autos and consumption.
Do you think rupee will continue to appreciate in the near term?
In the near term, the rally in INR is likely to reverse and we may see marginal depreciation towards 72. Oil prices are likely to appreciate to around USD 65/bbl in the near term which will be the driver for the currency market.
Any sector(s) which you think could turn out to a dark horse in 2019?
State-owned banks could be a dark horse in 2019 on account of the peak in NPL cycle, recovery in stressed assets via IBC, low valuations. A broad-based economic recovery will be supportive. Pharma could be a dark horse in 2019 as FDA issues fade, as well as cost competitiveness in global markets.
What should be the ideal strategy for investors for the next one year? How much (in terms of percentage) should be allocated towards equities, fixed income, gold etc.
We expect H2 of CY2019 to be good for equities and believe investors should be overweight equities, especially stocks that are geared to an economic recovery.
While the asset allocation depends on a number of factors like age and risk tolerance. On an average one could allocate 70% to equities, 20% to fixed income, 5% to gold and 5% to cash.
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