High stock market volatility ahead of Budget 2021; Sanjiv Bhasin has these sectors in focus | IIFL INTERVIEW

For the first time investors, Sanjiv Bhasin advises to keep a systematic investment plan (SIP) as market valuations are quite high

Indian share markets will witness extreme volatility in this week just ahead of Union Budget 2021, with the January F&O contracts expiring on January 28, 2021, says Sanjiv Bhasin, Director, IIFL Securities Ltd. Besides Budget, Sanjiv Bhasin says that factors such as global liquidity, rise in bonds or US Dollar, and stimulus announcement from US President Joe Biden, are among few factors which may impact Indian share markets in the coming days. In an interview with Surbhi Jain of Financial Express Online, Sanjiv Bhasin said there are a lot of opportunities in a few sectors for retail investors. For the first time investors, he advises to keep a systematic investment plan (SIP) as market valuations are quite high. The COVID-19 pandemic offered once in a lifetime opportunity to the investors. Here are edited excerpts:

With Sensex, Nifty making new highs, where do you see the indices going in the run-up to the Union Budget 2021?

Sensex at 50,000 and Nifty 50 index at 14700 could be the highs till the budget, as these are extreme level milestones markets were gearing up for. We have expiry of derivative contracts which would see higher volatility before the budget till 28th January being the last Thursday of the month.

What tax changes markets expect from the Budget this year?

Well, nothing much, just some tinkering with fiscal numbers and some extra on sin tax etc. The market would look for some relief being given to insurance as Covid reinsurance could be much more widespread than ever and the government can make it attractive to be insured in the future. The market would be hurt if any cess on Covid is levied as consumers do not need any more taxes.

What would you advise first-time stock market investors? Which sectors look attractive?

Kindly do a SIP as valuations are expensive and you may never be able to time the markets. This pandemic was once in a lifetime opportunity which came in March and those who seized it would be laughing their way to the bank. Either way, if you were invested or doing a SIP through mutual funds or directly then you would have by default participated in the fall.

Apart from Budget, what are the key risks and triggers in markets?

Global liquidity is calling the shots and if any rise in bonds or US Dollar comes suddenly then the repatriation of flows can cause a sudden correction, secondly, markets are looking forward to a big stimulus from the new President-elect which if falls short could again see a correction.

With new COVID strain cases, do you see that impacting the markets in any way?

Global liquidity and money printing at the lowest interest rates are fuelling the markets which are looking beyond the new strain as the vaccine makes up for the damage over the next few months. Also, India stands out as we have avoided the strain with herd immunity enabling the resumption of normal activity much faster than the rest of the world.

Has the COVID vaccine rollout changed the sentiments? Is Indian economy in recovery mode?

It has improved the sentiment and the psychological aspect as the individual is now more receptive to acceptance of the virus and learned to handle it better with keeping necessary precautions. India has been one of the better performers as we have seen herd immunity with correct precautions act in less affliction to the new strain which has been avoided.

Where do you see opportunities for retail investors in markets right now?

Materials as in steel and cement, pharma and IT along with consumption as auto numbers are most positive.