"Elections Do Not Have A Material Impact On The Markets In The Long Run"
We have shown improvement in market conditions? How do you see things shaping up going forward?
Over the last three weeks Indian markets have been resilient. Private banks supported the Nifty Bank stocks after PSUs took a breather to remain flat this week. So far, we have seen good action in Eicher Motors, ICICI Bank, and Havells India. Currently, the Nifty is 1% below its 200-DMA and we will get a strong conviction about the current rally once it crosses that level. Recent weakness in US and European markets, has led to some corrosion in Nifty and Sensex as well. We believe it is important for Nifty to retake its key support levels failing which we could see more downside in key indices.
Which sectors stood in earnings growth last quarter?
The results were a mixed bag. There was no single sector that was a standout performer last quarter. However, there were pockets of strength and weakness in every sector. Roughly half of Nifty stocks reported inline results. The number of stocks missing estimates was marginally higher than the ones delivering an earning surprise. L&T, Axis bank and GAIL were the notable outperformers whereas some stocks from energy, tech and pharma sector disappointed in the recent quarter.
Where do you place the current earnings cycle?How much of an improvement will we see in earnings next year?
Market expects a 12-14% earnings growth expectation for next year. For any material surprise energy, parts of financial services, pharma and technology will have to show a substantial improvement in earnings trajectory.
How do you see foreign inflows shaping up going forward?
For most part of the year FIIs have been net sellers. With rupee stabilising vs USD, foreign flows have turned positive in the last few weeks. However, with weakness in global markets, uncertainty of state elections we expect net inflows for the current year to be substantially lower than last year.
How much of a factor will the elections play in guiding the direction of the market?
In the short term, election results are a binary event. State elections are not as important as the key Lok Sabha elections next year. However, market participants will use state election results to gauge the mood of voters and estimate the odds in favour of the ruling party for 2019 elections. In the long-term, elections results do not have any material impact on the markets in our view.
Could you name top five stocks which you think are now available at attractive valuations after the recent correction?
ICICI Lombard, Divi's Lab, Vinati Organics, VIP and Havells look good to us. We would also keep a close watch on L&T, Axis Bank and ICICI.
What is your business strategy going forward?
At William O'Neil, we aim to revolutionize the way people invest in Indian stock markets. We are moving toward algorithms for a lot of investment. The days of a discretionary portfolio manager are limited. We must acknowledge that people want value for their money and they don’t want to invest in a one-size-fits-all product. We are developing algorithms based on our proprietary O’ Neil methodologies, data science and with a mix of predictive analysis and behavioral science.
Our algos are intelligent enough to identify opportunities in the market by analyzing systematic data point’s couple with Artificial Intelligence and Machine Learning to provide the right set of advises for execution. We currently have multiple quantitative strategies running live across various markets around the globe which are consistently outperforming the markets.
Recently the company acquired FPI licence to invest in India, what are your plans?
Indeed, we have just acquired our Foreign Portfolio Investment (FPI) license. We are very bullish on the markets and, hence, have acquired our FPI licence to invest our US funds in the Indian markets. We definitely feel that Indian markets have a lot of potential, both in the short-term and long-term. We will be investing heavily on all our Algo (which we have developed till now) through this FPI account within the next few months.
