As the Indian stock market experiences its longest correction since the COVID-19 pandemic, investors are seeking clear direction. Siddhartha Khemka, Senior Group Vice President and Head of Research (Retail) at Motilal Oswal Financial Services, recently shared his outlook and investment strategy for these volatile times.
Nifty Targets and Market Outlook
Khemka projects that the Nifty 50 index could consolidate and recover to the 23,000–24,000 range by the end of the current year. Looking further ahead, he anticipates Nifty reaching 25,000–26,000 by the end of fiscal year 2027 (FY27).
The market has been under pressure, with Nifty down 13% and Sensex losing 14.5% this year, marking a seven-week consecutive decline. Factors contributing to this downturn include elevated crude oil prices, surging US Treasury yields, and persistent outflows from foreign funds, all of which have dampened investor sentiment.
"A correction in the market could provide an opportunity for long-term investors who are looking beyond at least one to two years. According to Khemka, this is a good opportunity to accumulate."
Investment Strategy During Correction
Khemka suggests that the market may remain sideways for the next three months, but views the current correction as a valuable opportunity for long-term investors. He advises accumulating quality stocks with a time horizon of at least one to two years.
- Selective Approach: Instead of broad buying, Khemka emphasizes being selective, particularly in the mid- and small-cap segments.
- Avoid Pressure Zones: He advises against fresh buying in banks and NBFCs, noting that these sectors could face pressure during a rate-hike cycle. NBFCs, having seen a sharp rally recently, are particularly prone to correction.
Key Sectors to Consider
For investors looking for opportunities in the current environment, Khemka highlights specific sectors that could offer resilience or growth potential:
- Pharmaceuticals: The pharma sector is a strong contender, potentially benefiting from a weaker rupee.
- Information Technology (IT): Despite global headwinds, IT remains a sector to watch.
- Fast-Moving Consumer Goods (FMCG): Companies in the FMCG sector, often considered defensive plays, can also be accumulated during market corrections.
Ultimately, Khemka recommends focusing on companies that are more domestically oriented and less exposed to inflationary pressures, ensuring a more stable investment in uncertain times.