NEW DELHI: Dalal Street veteran Raamdeo Agrawal believes the recent spurt in domestic stocks has triggered fear of missing out (referred to as FOMO in market parlance), but said he would be a buyer if the market falls for some reason post general elections.
Brisk buying by FIIs, who are predominantly passive ETFs, have been leading the ongoing market surge, Agrawal told ETNOW. “It is party without invitation,” he said.
“Their entire basket of stocks witnessing this buying is different from what we were used to for last 4-5 years. Hence, most domestic portfolios are not aligned with FII portfolios. In my case, while we have participated in this rally, it has not been the way we would have wished,” the co-founder at Motilal Oswal Financial Services said.
Data suggests FPIs infused more than Rs 51,000 crore in domestic stocks in February, March after being net sellers of shares worth Rs 4,262 crore in January. Large FPI flows have lifted BSE Sensex by 9 per cent so far this calendar.
Agrawal said the market is pricing in BJP retaining power with a reduced majority of 245-250 seats, but with Narendra Modi as leader.
“I dont think there is a mood to believe this government wont come back. There is inadequate understanding of what will happen if this government does not come,” he said.
Agrawal said equity investors do face short-term hiccups, but investing is a long-term game and one needs to move over short-term disruptions. “Something is always happening. If it is not general election, then something else. Investing is a less active, lazy business,” he said.
Agrawal said while elections are a big event, his investment decisions do not depend on what if the ruling party wins 250 seats or 300 seats. “We watch it closely, but it does not make me move,” he said.
Data suggests the market has offered positive returns post general elections in eight out of last 10 occasions, irrespective of whether the government is perceived as market-friendly or not. This time will not be different, Agrawal insists.
Indian market rallied in the first four years of the Modi government on hopes the earnings revival. While PEs expanded, earnings did not follow. Ultimately, midcap and smallcap stocks collapsed the moment flows started slowing down amid a US Fed tightening. There was fear that the rout will linger on.
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