Despite a rout in Wall Street, the Indian stock markets shrugged off any concerns by posting a 732-point rally on Friday to post the biggest one-day gain in 29 months and close the week at 34,733. The markets had gone loco during the week by trading on huge volatility in both directions. Surging crude oil prices are throwing the Indian economy out of gear as energy is an important factor for us. With crude oil prices at four-year highs, the global oil market is currently termed as “emotionally imbalanced”. With the Donald Trump administration determined to push down Iranian exports, the oil sanctions in November will be crucial for India and its economy. Currently, there is no oil supply shortage in the global markets but supply chains are being disrupted by oil producing countries due to the impending Iran sanctions. Our stock market view remains cautious in the short-term due to the rupee volatility, surging crude oil prices, stretched valuations and rising current account deficit. Equity investors should brace for more downgrades in the September 2018 quarterly earnings’ season, starting this week. We feel that the Nifty may decline and touch the 10,000-mark by mid-November.
On a fundamental basis, we feel that Tata Elxsi is a good stock to invest in for portfolio investment in the tech space. India is one of the top destinations for IT companies delivering both on shore and offshore services to global clients. An entire gamut of new technologies has emerged in the social, mobility, analytics and cloud (SMAC) space, offering a whopping US$1 trillion opportunity for Indian IT companies. Cloud represents the largest opportunity followed by social media as one of the most lucrative segments witnessing extremely strong growth. The engineering research and development sector continues
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.