Knowledgeable view: Nifty 50 might rebound quickly; don’t prioritise gold over equities, says Naveen Kulkarni of Axis Securities PMS

Knowledgeable view: Naveen Kulkarni, Chief Funding Officer at Axis Securities PMS, believes the Indian inventory market has entered an oversold zone and appears set for a rebound. In an interview with Mint’s Nishant Kumar, Kulkarni mentioned that gold is a vital asset class to contemplate, however it should not come on the expense of fairness investments. Kulkarni additionally shared his insights on the “Trump tariffs”, outlook on IT and pharma sectors and the way one ought to spend money on large-caps, mid-caps and small-caps. Listed below are edited excerpts of the interview:

What elements are driving the market down? Is the Trump tariff the most important motive, or are there considerations over slowing development and foreign money hitting new lows?

Donald Trump’s tariffs are clearly a significant component contributing to the numerous decline of the Indian fairness markets.

Whereas the precise influence of the tariffs is unclear, their affect on foreign money stability is critical, notably affecting returns for international portfolio buyers.

Foreign money stability can be essential for market consolidation.

India’s financial system, which is characterised as a development financial system, will get the next a number of on account of its scale and future development prospects.

Nevertheless, these tariffs might additionally influence world development, subsequently affecting India’s development.

That mentioned, development prospects are displaying indicators of gradual enchancment, indicating that worth within the Indian financial system might quickly emerge, resulting in the stabilisation of the foreign money.

Consequently, whereas the present scenario is difficult, it’s anticipated to be short-lived.

The Nifty 50 is already down 13% from its peak. Ought to we brace for a deeper ache of 20%?

The Nifty 50 has skilled a major 13 per cent correction, however the broader market correction has been much more appreciable.

Presently, over 80 per cent of the shares within the BSE 500 are buying and selling beneath their 200-day shifting common. Moreover, greater than 40 per cent of those shares have seen corrections of over 30 per cent from their peak values. In consequence, the market has entered an oversold zone.

Over the previous 20 years, the market has rebounded from comparable technical ranges, and we consider this occasion can be no completely different.

Due to this fact, it’s unlikely that we are going to see an extra correction of 10 per cent from the present ranges.

These circumstances current alternative for long-term buyers to contemplate including to their portfolios, because the potential for double-digit returns from these ranges has considerably elevated.

Ought to we be involved about India’s slowing development? Are the underlying points deep-rooted, or is that this only a cyclical slowdown?

India is a structurally rising financial system, and there’s no motive to be involved about its development prospects.

Whereas linear development may be difficult for any financial system, the Indian financial system is predicted to develop sooner in FY26 than in FY25.

The present slowdown is merely cyclical, and we are able to anticipate a rebound over the subsequent few quarters. Due to this fact, there is no such thing as a want to fret in regards to the nation’s structural challenges.

Do you suppose it’s time to trim publicity to equities and purchase extra gold?

This can be a good time so as to add equities to your portfolio, as there may be important panic promoting available in the market, permitting high quality firms to be bought at engaging valuations.

Relating to gold, it has emerged as a robust asset class to carry, now competing with the fixed-income asset class.

Globally, extra establishments are making ready to spend money on gold, which means that costs might stay secure and provide extra constant returns sooner or later.

Due to this fact, whereas gold is a vital asset class to contemplate, it should not come on the expense of fairness investments, which can nonetheless ship superior returns from present ranges.

How ought to we play the monetary sector after the speed reduce? What shares do you discover engaging?

Banks are presently buying and selling at engaging valuations, and lots of non-banking monetary firms (NBFCs) have additionally turn into inexpensive.

Nevertheless, it’s important to deal with the standard of the franchise, notably these with a safer lending portfolio. Due to this fact, investing in high-quality monetary companies firms is an effective technique presently.

Within the Trump period, what needs to be our technique for the IT and pharma sectors?

The IT sector is predicted to carry out effectively within the present period, however the emphasis can be on development and the flexibility to ship optimistic surprises. 

At this level, the potential for a major optimistic outlook from the IT sector seems restricted, which means that returns will doubtless align with total market returns. 

However, the pharma sector has proven robust efficiency and delivered good returns in 2024. Nevertheless, returns on this sector will rely closely on particular person shares from the present ranges.

If somebody has ₹1 lakh to speculate, how ought to they allocate it throughout large-cap, mid-cap, and small-cap shares? What would you recommend?

Giant-cap shares present good security and the potential for double-digit returns in 2025. 

In the meantime, following a major correction over the previous couple of months, small- and mid-cap shares might provide substantial returns. 

On this phase, it’s important to deal with high quality, as loads of high-quality shares can ship robust returns from present ranges.

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Disclaimer: The views and suggestions above are these of particular person analysts, consultants, and brokerage corporations, not Mint. We advise buyers to seek the advice of licensed consultants earlier than making any funding choices.