multibaggers: ETMarkets Smart Talk: IT, pharma, and specialty chemicals will create multibaggers in next 10 years: Amit Jain

“Right now, IT, pharma and specialty chemicals will be developing the next multi-bagger over the next 10 years,” he says Amit Jainco-founder, Ashika Global Family Office Services.

In an interview with ETMarkets, Jain said, “Any decline in the Indian market is a buying opportunity as this ongoing decade of 2030 will be the decade of India.” Edited excerpts:

What is driving the rally in the Indian market – is it the festive mood, the change in global sentiment or earnings expectations?
Yes, the Indian markets appear to be in festive mode as they continue to slide below 17k on the Nifty50. If you look closely, as of June 2022, the Indian market is probably one of the best markets in the world.

At a time when the Dow Jones has already broken the June 2022 lows, Indian markets are very resilient on the downside.

There are two factors: 1) Very strong domestic inflows into equities on every dip; and 2) the market expects very strong Q3 numbers due to Diwali as there will be lots of revenge buying and celebrations on this Diwali.

Diwali is coming – what is your advice to investors for Samvat 2079? Where is the market headed? Are new highs imminent?
In our view, the Indian market will reach new highs much sooner than any other market in the world.

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There is a very high probability that we will have a new high for Nifty by the end of this calendar year.

Any drop in the Indian market is a buying opportunity as this ongoing decade of 2030 will be the decade of India.

We’re in the final quarter of calendar 2022 – could we see fireworks or will the holiday season keep spirits down?
I am sure that after the second quarter we will have fireworks of numbers and this resilience and positive momentum of the Indian market will continue into the end of this calendar year.

Will Rupee Depreciation Continue In December Quarter? Which sectors are likely to be hit the hardest?
If you look closely, INR has been one of the strongest currencies in the world with the exception of the US Dollar. INR has outperformed GBP, Euro and Yen by miles in YTD performance versus USD.

In my opinion, INR will continue to be one of the best currencies; However, the dollar index will have a challenge breaking above 124 on the higher side, which it last touched in 1985.

If the dollar continues to strengthen, all import-oriented sectors could suffer quarterly earnings.

Few global investment banks have expressed concerns about the rally in Indian markets. What are your views? Do you think the outperformance is sustainable?
These global banks have long raised concerns, but now it is a different Indian market, driven more by domestic money than foreign investors, so we will continue to buy Indian markets on any downturn.

The outperformance comes with much higher growth opportunities for the Indian economy, which is rare in the world today; Therefore, this premium of the Indian market is justified.

We have a good sell off in markets across the board – any stocks that are still a good buy for a 1 year period on falling stocks?
From my point of view, the IT & pharmaceutical sector is in the last phase of the bear phase. We see some excellent opportunities in these two sectors over the next 1 to 3 years.

How should investors deal with high PE stocks, particularly those trading above their industry PE? What are the other valuation parameters to use when making a buy or sell decision?
For now, investors might avoid high PE stocks as they will experience both price and timing corrections if their Q2 results don’t come in as expected.

Currently we see some value investment opportunities in IT, pharma and banking. As such, investors may choose to favor these value opportunities over expensive PE stocks.

When choosing a stock, investors need to select those stocks that exhibit higher ROE, ROCE, and lower debt-to-equity ratio and reasonable PE ratio compared to industry PE.

Any themes that are multi-year themes that have emerged recently that could bring forth the wealth creators of the future?
At this moment, IT, pharmaceuticals and specialty chemicals will develop the next multi-bagger in the next 10 years.

Any sectors you think investors should avoid in the December quarter? If yes why?
Investors could have a lower exposure to FMCG and an overweight to IT, banks and pharma over the next 1 to 3 years.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times) multibaggers: ETMarkets Smart Talk: IT, pharma, and specialty chemicals will create multibaggers in next 10 years: Amit Jain

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