Amid euphoria, market mavens see consolidation ahead

A consolidation in the broader market is expected this year and investors should accumulate only selective quality stocks across the market cap spectrum to add value to their portfolio.

Amar Ambani, head of research, Yes Securities, said he expects the Nifty to go up to 13000-level, but at the same time, he does not expect the broader market to participate in a huge way.

"It is slightly paradoxical. The year 2018 was one big year of correction, I think 2019 will also be one such year and so will be the first half of 2020, post which the bull run will begin. I believe 2019 will be a year of consolidation. If from the current level, Nifty goes up 12%, midcaps and smallcaps will rise 20%. There is a consolidation expected in the overall trend, whereas 5-7 stocks will take Nifty higher," Ambani said.

He, however, is of the view that investors should not be in a hurry to deploy funds, and may invest in a staggered manner or opt for SIP routes.

"If there is cash, investors should retain it. When the new broader market rally starts next year, there could be a fresh set of midcaps and smallcaps, a fresh set of sectors that can add value. Investors should take time," Ambani said.

On Tuesday, benchmark indices rebounded in the afternoon trade after initially being choppy amid weak global economic sentiments. Though S&P BSE Sensex rose 129.98 points, or 0.33%, to settle at 39816.48 and Nifty gained 44.70 points, or 0.38%, to 11910.30, the market breadth was in favour of declines. About 1,350 shares declined against 1,141 advancing shares on BSE.

Siddharth Sedani, vice president – equity advisory, Anand Rathi Shares and Stock Brokers, said the second half of the fiscal will be good for midcaps, depending on revival in their earnings.

"For two years, midcaps have underperformed and we expect it to bounce back this year, but only in the second half. However, it will depend on how earnings are reviving. Investors can accumulate selected good quality stocks. A good largecap performer with a good growth-oriented story will be expensive," Sedani said.

Devang Mehta, head – equity advisory, Centrum Wealth management, said the broader market has to start performing.

"Probably they are waiting for the Budget, or cues like how monsoon progresses, and maybe after that broad-based participation in midcaps will also come to the fore. We have been suggesting investors accumulate good quality businesses which are market leaders across the market cap spectrum, and of those with high market share," Mehta said.

According to A K Prabhakar, head of research, IDBI Capital, one should never "time the market", but accumulate depending on the quality, even if some stocks are trading at a higher level. Investors may opt for SIP route as well to have good stocks in their portfolio, he said.

"Some good quality stocks are likely to see a bull run in the next 4-5 year-horizon, hence investors can slowly accumulate them at their current levels," Prabhakar said.