Daily Voice | This expert analyst claims that policy changes are the only thing that may sabotage economic progress

 Daily Voice | This expert analyst claims that policy changes are the only thing that may sabotage economic progress

According to Jimeet Modi of SAMCO Group, Samvat 2080 is anticipated to be a very stock-specific year that isn't agnostic to any size orientation, whether tiny, mid-cap, or large-cap companies.

Founder and CEO of SAMCO Group Jimeet Modi feels that elections are now the main factor influencing the Indian economy. In an interview with Moneycontrol, Modi explains how the incoming government's capital expenditure policies and the vote results would affect the prospects for economic development in 2024–2025.

He thinks there won't be any issues as long as growth-oriented measures are implemented as planned. "The only thing that can fracture the growth is the reconfiguration of the government in another direction."

With over 15 years of experience in technology, investment analysis, and equities research, the financial expert believes the data on corporate profits have been quite close to the expectations. "The positive surprises have outnumbered the negative ones," according to him. Takeaways from the conversation:

We are approaching the general elections that are slated for the middle of the next year. What effect does the election have on the economy?

The results of the general elections in May 2024 will have a significant impact on the forecast for FY25, provided that the new administration upholds the Capex program. We won't have any issues as long as growth-oriented policies are maintained. The government's reset in a different direction is the only thing capable of fracturing the expansion.

We have just begun Samvat 2080. What are your expectations for this Samvat after a ten percent rise last time?

Although it may be difficult to predict with precision how much of a rise we will see over the course of the next year, our general assumption is that the market will continue to go higher. Many potential future events, such as a drop in interest rates, a potential slowdown in the rate of inflation, an improvement in corporate profit margins, along with the outcome of the general election, could act as catalysts and triggers for the market and continue to benefit investors in the upcoming year.

Additionally, an analysis conducted by SAMCO Research reveals that during the last 40 years, the Sensex has returned an average of 14.3 percent in the six months leading up to the general elections. The Sensex has shown exceptional resilience in the face of political unrest before each of the last 11 general elections between 1980 and 2019. This demonstrates how the stock market can survive and even prosper in the midst of political rumors and shifts. We anticipate the pattern to continue this time as well.

Which potential major hazards affect the Samvat 2080 market?

We'll examine two significant risk variables. The first is the unfortunate result of the 2024 general elections. This could be the stock market's biggest shock. The second is an unexpected spike in crude oil prices, which may ruin both the narrative of a potential drop in US interest rates and the deflation celebration.

The two main hostilities that are now raging between Israel and Palestine (Gaza) and Russia and Ukraine might escalate, which would cause a spike in oil prices. Given that the global price of crude oil is a significant risk factor, the situation might become worse if the third front is opened up in the future.

Name five industries that a portfolio has to include for Diwali 2023 and explain them.

The consumer and banking sectors are often areas that investors may focus on over a medium- to long-term period of time.

There has been a protracted decline in the consuming sector. Additionally, future lowering interest rate scenarios will help the sector's firms' profit margins.

Despite failing in the previous few quarters, banking is predicted to do well as value is starting to emerge in that sector. Consequently, investors should focus on these two industries.

In FY25, do you anticipate a significant resurgence in the export-oriented sectors?

Yes, to a certain degree it is anticipated that technology, the main export-oriented industry that has been experiencing slow development for some years, would do well. Additionally, the weakening rupee will increase the competitiveness of Indian exports, particularly software exports, and may lead to additional expansion.

Which size hats will be popular in Samvat 2080—large, mid, or small?

It seems to me that Samvat 2080 is going to be a highly stock-specific year, regardless of size orientation—small, mid-cap, or large-cap companies. It will be a stock-specific market, meaning that certain market sectors will perform well and others poorly.

However, if we look at the market as it is now, large-cap values are generally significantly greater than those of mid-caps, even though mid- and small-cap values are now seeing more volatility.

Are the corporate profits reports accurate based on your projections?

Indeed, the company's profits have closely matched the projections. There have also sometimes been pleasant surprises. Overall, it has been a healthy earning season, with more positive surprises than negative surprises this quarter (September).

Do you believe that the current cycle of Fed rate hikes is over? Do you anticipate a recession or a gentle landing in the US in 2024?

I believe that the equities market has already factored in the possibility that future interest rate hikes by the US Federal Reserve may not occur. However, the prevailing wisdom currently is that interest rates will remain higher for longer, or higher for longer.

It is anyone's estimate as to whether or not we will have a recession. There may be a recession even if data indicates that inverted yield curves, as they have been in the US, occur before recessions. However, the US economy's present strength doesn't appear to be pointing to a big recession in 2024.

However, I believe that US interest rates may remain high for a period of six to nine months, and that the Fed may gradually shift its position or possibly start to reverse the trend in US interest rates in the second half of CY24. But nobody can say for sure.