Expert view: Indian stock market will regain its footing; consider allocating 5-10% to gold, says Tradejini COO

Expert view: Trivesh D, the COO of Tradejini, believes the Indian stock market will brush off minor disruptions and regain its footing. He says rate cuts may trigger more measured market movements, with investors adjusting cautiously to the new rate environment rather than diving into a bullish trend. In an interview with Mint, Trivesh discusses the impact of the Maharashtra assembly election and the US presidential election on the Indian stock market and whether one should increase exposure to gold.

Edited excerpts:

What is your view on the current market structure? What lies ahead for the short term?

The market is currently in the consolidation phase, lacking clear direction post-elections.

With global markets potentially facing short-term volatility due to upcoming elections and Fed rate announcements, I expect the Indian market to stabilize within a couple of weeks.

The recent Nvidia results, while anticipated, are in sync with the street expectations and hence haven't significantly impacted the Indian market, which has shown resilience.

In my view, the market will soon brush off the minor disruptions and regain its footing, leading to a more stable short-term outlook.

We have the Maharashtra election in November. How can its outcome impact the market?

Given the state's significant economic and political influence, Maharashtra Assembly elections could introduce some short-term volatility in the market.

The shift between leaderships over the past five years highlights underlying political instability.

If the BJP-led coalition secures a win, it could bolster market sentiment, particularly with infrastructure initiatives like the Bullet Train project.

On the other hand, an opposition victory might introduce uncertainty, potentially unsettling investors.

With Ajit Pawar's leadership in question following his split from Sharad Pawar, the political landscape remains fluid, and the market response will largely depend on how these dynamics unfold.

How important is the US Presidential Election for the domestic market?

Although the US presidential elections do not directly have an impact on the Indian markets over some time, certain undercurrents can play out.

A Trump victory would give more certainty on the Indo-US relationship; the market might take that positively due to his strong business-friendly approach and established relationship with Prime Minister Modi.

This continuity could mean quicker decisions in areas like trade and defence, which would be reassuring for investors.

On the flip side, there might be some uncertainty if Kamala Harris wins. Her approach to India isn’t as clear-cut, and her administration might focus on different priorities, like human rights or climate change.

This could lead to cautious moves in the market as investors wait to see how the new dynamics play out. Trump’s focus on countering China aligns with India’s interests, which could benefit certain sectors.

Still, with Harris, we might see a more measured approach, potentially leading to some market jitters as policies unfold.

The rate-cut cycle is to start. Should we expect a fresh leg of bull run in the market?

As the rate-cut cycle begins, a fresh bull run in the market seems unlikely.

Banks are currently under pressure, needing more deposits while being tied to higher-rate fixed deposits.

The expected rate cuts in India will likely be gradual, around 0.25 per cent to 0.5 per cent over a year, which isn’t enough to spark a major rally.

Instead, we can expect more measured market movements, with investors adjusting cautiously to the new rate environment rather than diving into a bullish trend.

Which sectors should we invest in at this time? Where do you see growth and value?

Right now, the pharmaceutical and manufacturing sectors stand out as strong investment opportunities, offering both growth and value.

These sectors are showing solid potential, especially with ongoing developments and demand. On the other hand, the IT sector seems to be in a more cautious phase, so a wait-and-see approach might be wise there.

Additionally, PLI (production-linked incentive) stocks are worth considering, as they are likely to benefit from government support and incentives, positioning them for good performance shortly.

What could be an ideal investment strategy for the next one year? Should we increase our exposure to gold?

For the next year, diversification should be your main strategy, with allocation tilted more towards the large caps.

Allocating 5-10 per cent to gold can offer stability, but it’s unlikely to outperform equities, particularly in India.

While gold typically rises when markets struggle, India’s unique market dynamics have seen both gold and equities climbing together.

Balance is, therefore, essential; navigating any uncertainties will be made easier by diversifying across asset classes and industries and by keeping up with market developments.

Keeping a flexible approach and adjusting as new information comes in will be crucial to optimising your returns.

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Disclaimer: The views and recommendations above are those of the expert, not Mint. We advise investors to consult certified experts before making any investment decisions.