“Sell On Every Rise” - Akash Jain, Vice President – Research, Ajcon Global

Not too long ago, there were equity strategists who advised investors to go short on the market by lowering the targets. Shrouded by this pessimism, the markets cracked from their yearly highs. FIIs, which typically bring in optimism to the Indian markets, also started to worry. Most of the equity advisors from FIIs raised concerns on the current state of economic affairs of the country and started to exit the Indian markets.

However, things stand quite reversed now. FIIs that were exiting the domestic bond and equity markets are coming back to the country. Though the net FII investments in the country have remained in the negative terrain in the period from May 2013 until August 2013, they have emerged as net buyers in the domestic equity and bond markets for the first time in the last 4-5 months.

In the first 6 trading sessions in September 2013, FIIs are net buyers in Indian securities. As of September 10, 2013, FII investment in the country in the month stood at Rs 3180 against a total outflow of Rs 15695 crore in August 2013. The wise question to ask would be is they going long on their portfolios?

DSIJ had a talk with Akash Jain, Vice President – Research of Ajcon Global on the market outlook, and he is of the opinion that the recent rally is very surprising as there was no change in the country’s fundamentals. Dr Raghuram Rajan’s entry as RBI Governor has improved the image of the country, which could explain why FIIs have become positive on the domestic markets. However, Jain also said that it would take about 6 months to 1 year to really see the impact of the new changes made by Dr Rajan, and hence, the rally in the market has surprised many. Going forward, the indices would be range-bound for some time but they may give some gains by Diwali.

While rising inflation remains a key risk for the market, Jain expressed optimism that Dr Rajan may cut the interest rates. His advice to investors is to sell on every rise and accumulate blue chips on every dip.

Jain has recommended going long on FMCG (ITC, HUL) and Pharma stocks (Glenmark, Dr Reddy’s Labs) and is also positive on the Auto sector (Tata Motors, Mahindra & Mahindra) as the valuations look attractive. In the Fertilisers sector, he is bullish on GSFC and Coromandel International and in Gas Utilities, he is positive on Gujarat Gas and Petronet LNG. In the BFSI space, Jain’s recommendations include IDFC, Bajaj Finance, L&T Finance, Bajaj Finserv, IIFL and Aditya Birla Nuvo, Bank of Baroda, United Bank of India, Union Bank of India, YES Bank and DCB Bank.