Investors who have been sitting outside markets due to uncertainty around election results are expected to return to the market, said Sanjay Sinha, founder of Citrus Advisors, adding that the upcoming Reserve Bank of India monetary policy meeting and Union Budget will keep the interest alive in the markets.

Share Market Live

NSE

Speaking about the market, Sinha said, “The market itself is not a very homogenous market. Over the last 1 year very strikingly we have seen a dissimilar performance of the large-caps versus the mid-caps.”

“Going by the classical way in which the domestic money has been allocated, I expect that larger part of the allocation will go to the midcaps rather than to the largecaps. So, while the Nifty and Sensex above 12,000 and 40,000 points respectively will keep the sentiment alive, I think much of the action will happen in the midcap space,” he added.

Sector specific, Sinha said, “One shift which I think is happening in the market, a lot of interest seems to be shifting to the cyclical sectors, more particularly the banking and the capital goods. There has been some apathy that has been building up over the last couple of months with the consumption-oriented space and more particularly the consumer discretionary. I think that apathy has also extended to auto and auto ancillary. I would say that if you want to play with the momentum of the market, you might go along with these sectors which are the sectors of favour and flavour today.”

“If you play a little contrarian, I would say that the India story cannot progress without consumption as the underlying theme. Therefore, we are going to be seeing some weakness in the consumption-oriented space. As a contrarian player, it might make sense to accumulate them at these weaknesses when the price to earnings ratios are more favourable. However, the horizon will have to be a little longer and you will have to stagger your investment over a period of time because you do not know whether this is the bottom or the bottom is some distance away. So, I would say you should play 60 percent in favour of the cyclical and maybe 30-40 percent in favour of the consumer discretionary,” he added.

Speaking about the auto sector, he said, “We still have not seen the onset of monsoon. Monsoon is not just one variable, it is split into three, time, space, and volume. All the three factors connected with monsoon have to be playing out right for the rural consumption to come back into play. If the monsoon is favourable on all these three factors, then I would expect that some of these discretionary sectors particularly two-wheelers, tractors will be beneficiaries.”

Disclaimer:

The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.