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

Skilled 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 stated that gold is a crucial asset class to contemplate, nevertheless 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 put money into large-caps, mid-caps and small-caps. Listed here are edited excerpts of the interview:

What elements are driving the market down? Is the Trump tariff the largest motive, or are there issues over slowing progress 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 impression of the tariffs is unclear, their affect on foreign money stability is severe, notably affecting returns for international portfolio traders.

Foreign money stability will likely be essential for market consolidation.

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

Nevertheless, these tariffs might additionally impression world progress, subsequently affecting India’s progress.

That stated, progress prospects are exhibiting 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 state of affairs 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 big 13 per cent correction, however the broader market correction has been much more appreciable.

At present, over 80 per cent of the shares within the BSE 500 are buying and selling beneath their 200-day transferring common. Moreover, greater than 40 per cent of those shares have seen corrections of over 30 per cent from their peak values. Because of this, 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 will likely be no totally different.

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

These situations current alternative for long-term traders 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 progress? 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 progress prospects.

Whereas linear progress might be difficult for any financial system, the Indian financial system is predicted to develop quicker in FY26 than in FY25.

The present slowdown is merely cyclical, and we are able to anticipate a rebound over the following few quarters. Due to this fact, there isn’t any 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’s vital panic promoting available in the market, permitting high quality firms to be bought at engaging valuations.

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

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

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

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

Banks are at the moment buying and selling at engaging valuations, and plenty of non-banking monetary firms (NBFCs) have additionally grow to be 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 providers firms is an effective technique right now.

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

The IT sector is predicted to carry out properly within the present period, however the emphasis will likely be on progress and the power to ship optimistic surprises. 

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

Then again, the pharma sector has proven sturdy 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?

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

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

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

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Disclaimer: The views and proposals above are these of particular person analysts, specialists, and brokerage companies, not Mint. We advise traders to seek the advice of licensed specialists earlier than making any funding choices.