Stay Invested: Why Neeraj Dewan Recommends Accumulating Quality Stocks

The recent decline in global crude oil prices has significantly eased major headwinds for Indian equities, fostering a more optimistic sentiment among domestic and foreign institutional investors. Market expert Neeraj Dewan suggests that rather than attempting to time market volatility, investors should leverage current periods of uncertainty to build positions in fundamentally strong companies.

Crude Oil Decline Eases Investor Anxiety

For much of the recent period, volatile oil prices served as a primary deterrent for Foreign Institutional Investors (FIIs) looking at the Indian market. The sharp correction in crude oil has acted as a catalyst for improved sentiment. Dewan notes that if geopolitical tensions in the Middle East remain stable, oil prices could potentially decline further, providing a more favorable macro environment for Indian equities.

While global factors such as US and domestic inflation data, along with monsoon developments, are expected to trigger periodic volatility, these should be viewed as entry points rather than reasons for exit.

Sectoral Picks: Where to Accumulate

Dewan identifies several sectors that are currently offering attractive long-term opportunities due to reasonable valuations and strong underlying themes:

  • Financials & Defence: After a period of consolidation, the defence sector is showing renewed upward momentum. Financial stocks have also been a primary area for accumulation, yielding positive early returns.
  • Infrastructure & Railways: With many mid- and small-cap stocks undergoing corrections following earlier sell-offs, railway and infrastructure-related themes remain available at decent valuations.
  • Metals: Despite potential near-term corrections in specific segments like aluminium, the broader metals sector remains constructive. Demand is expected to stay healthy, driven by domestic growth, US markets, and construction activities in the Middle East.

With the anticipated NSE IPO drawing significant attention, Dewan predicts short-term pressure on BSE shares. Investors may perceive BSE as expensive or look to shift capital toward the upcoming NSE issue. However, he classifies this as a temporary shift rather than a structural concern.

Dewan suggests that any meaningful correction in BSE—specifically in the range of 10% to 15%—should be viewed as a strategic buying opportunity. He maintains that the overall appetite for capital market-related themes remains robust, evidenced by the strong performance of listed brokerages and asset management companies.

Real Estate: A Tale of Two Markets

The recovery in the realty sector currently appears to be driven more by value buying than a broad-based surge in demand. A geographic divide is evident: Mumbai and its surrounding areas have shown stronger momentum, whereas the National Capital Region (NCR) remains relatively sluggish. In the NCR, developers are proceeding with caution, leading to fewer property launches than anticipated. The sector's next major move will depend heavily on inflation trends, interest rate stability, and a healthy monsoon season.

Key Takeaways

  • Focus on Quality: Avoid market timing and use volatility to accumulate fundamentally strong stocks in financials, defence, and infrastructure.
  • Monitor Macro Drivers: Keep a close watch on crude oil stability, inflation data, and monsoon performance to navigate short-term fluctuations.
  • Strategic Entries: Treat sectoral corrections, particularly in BSE or metal stocks, as opportunities to build long-term positions.