Atul Suri On The Market | 'Trends That Dominated Over 2-3 Years Slowing Down' | Stock Market

Summary

In this interview, Atul Suri discusses the current market trends, emphasizing a 'Goldilocks' scenario with growth but no hyperinflation. He highlights the correction in commodities, stable bond yields, and currency values, while equities are at lifetime highs. Suri suggests a sector rotation towards defensive plays like FMCG and Pharma, anticipating rural demand revival due to a strong monsoon and government focus. He remains bullish on the market, with a short-term focus on Pharma and a long-term view favoring Industrials, expecting the Nifty to reach 26,400.

Takeaways

• 📈 The global market is currently in a 'Goldilocks' scenario, with growth but no hyperinflation, according to Atul Suri.
• 📉 Commodity prices, including copper, have corrected, which Atul views as a positive sign, easing inflation concerns.
• 🔽 There's a shift in market themes, with cyclicals and industrials taking a breather, while sectors like Pharma, FMCG, and IT are gaining attention.
• 💊 Pharma is a sector that Atul believes has been overlooked and is now poised for significant growth, with improvements in performance and cleanup operations.
• 🌾 The rural theme is expected to play a significant role in market trends, especially with a good monsoon season and potential government support for rural areas.
• 🚗 Within the auto sector, two-wheelers and rural-facing companies are expected to outperform due to increased rural demand.
• 💹 Despite short-term volatility, Atul remains bullish on equities, suggesting that the major global markets are near all-time highs.
• 📊 The FMCG index has hit an all-time high after several years, indicating a shift in market preferences towards quality stocks.
• 💼 Tech-driven NBFCs and BFSI sectors are gaining traction, potentially at the expense of traditional banking sectors.
• 🔮 For the short term (3-6 months), Atul recommends overweighting Pharma and FMCG, while maintaining a long-term focus on industrials.

Q & A

What is Atul Suri's overall view on the current market scenario?

Atul Suri views the current market scenario as a 'Goldilocks' scenario, indicating a balance between growth and controlled inflation. He believes that despite daily fluctuations, the overall positioning of asset classes like commodities, bonds, currencies, and equities is favorable.

How does Atul Suri interpret the recent performance of commodities and its impact on inflation?

Atul Suri sees the recent correction in commodity prices, such as copper, as a positive sign that helps to alleviate concerns about inflation. He suggests that the cooling of commodity prices indicates that the inflation issue, which was a significant problem globally, is now more or less under control.

What is Atul Suri's perspective on bond yields and their relation to commodity prices?

Atul Suri links the stabilization of bond yields to the cooling of commodity prices and inflation. He notes that as commodity prices and inflation concerns ease, there is a shift in the conversation towards the possibility of the Federal Reserve cutting rates, which is a change from the previous trend of increasing rates.

How does Atul Suri assess the current state of global currencies?

According to Atul Suri, there is no major upheaval in global currencies, with the US Dollar Index (DXY) near 100, which he suggests is a healthy level. This stability in currency markets contributes to the overall 'Goldilocks' scenario he describes.

What are Atul Suri's thoughts on equities and their current valuations?

Atul Suri observes that equities are near or at all-time highs, which he interprets as a sign of a healthy market. He believes that the market is in a 'sweet spot' where there is growth without hyperinflation, and he remains optimistic about the potential for equities.

What changes in market themes or trends does Atul Suri discuss?

Atul Suri discusses a shift in market themes, noting that sectors like Industrials, PSU banks, and defense stocks, which had been leading the market, are now experiencing a cooldown. He suggests that this is a normal part of market cycles and that other sectors, such as Pharma and FMCG, are now catching up.

How does Atul Suri view the performance of the banking sector and its future prospects?

Atul Suri indicates that the banking sector, particularly the Nifty Bank index, is currently underperforming compared to other sectors. However, he believes that every sector will have its time in the sun and that the banking sector will eventually see a resurgence, although he does not see early signs of this at the moment.

What is Atul Suri's strategy for portfolio allocation in the current market conditions?

Atul Suri suggests that while Industrials and cyclicals should remain a significant part of the portfolio, there is a need to reallocate some weight towards sectors like Pharma and FMCG that have been underperforming but are now showing signs of improvement. He also emphasizes the importance of staying invested and not being in cash during market fluctuations.

How does Atul Suri evaluate the potential of new tech stocks in India?

Atul Suri acknowledges the exceptional strength shown by new tech stocks in India, such as Zomato and Paytm. He advises that these stocks should be evaluated based on their earnings and growth potential rather than traditional valuation metrics, as their growth trajectories can be parabolic. He is particularly interested in companies that can deliver earnings and have a clear path to profitability.

What is Atul Suri's outlook for the auto sector, especially in terms of two-wheelers and four-wheelers?

Atul Suri sees a divergence in trends within the auto sector, with two-wheelers performing well, possibly due to a strong rural demand. He expects this trend to continue as the government is pushing for rural development and with a record monsoon leading to a potentially strong harvest, which could boost rural consumption.