Delhi-based Alankit Ltd, is one of the fastest growing players in the e-governance sector and acts as the last mile between the government and citizens. With a focus on customer-centric operations coupled with digital initiatives, Alankit caters to a wide audience, including corporate entities and individual investors through its wide network of business branches across the country. Ankit Agarwal took over as MD of Alankit in 2009. Ever since, he has been shaping the business and steering it towards exponential growth, leading major projects within the group. With strong industry experience and specialisation in the fields of finance and accounting, Agarwal has introduced new lines of business such as the Indian Workers Resource Centre (IWRC) in the UAE, Energy Efficient Products Distribution, Project Passport and e-KYC. Under Ankit’s leadership the group’s global forays have clocked double-digit revenue growth for the company. Agarwal spoke to Lancelot Joseph on the current situation in the market. Excerpts:
What, according to you, are the main reasons for the stock market to continue a rising trend?
The main reason for the stock market to rise is bailout packages given by governments globally. In India, the Reserve Bank of India cut its key policy rate by 115 basis points over the last three months and announced a liquidity injection of around Rs8 lakh crore in the financial markets since its first announcement on 27 March, 2020.
As the uncertainties of the Covid pandemic multiply, investors realise the need to rely upon more income resources. Despite the economy slowing down, there have been positive sentiments in global stock markets. Market participants say that with so much liquidity worldwide and very few places to go, a lot of money is finding its way into the stock markets, thereby lifting it.
Are you expecting a correction, and if so, when?
Yes, the stock market is due for a correction as it approaches new highs amid economic turmoil, geopolitical tension and political unrest. The stock market is due for a 10-15 per cent correction. There are more headwinds than tailwinds for equities. The Covid crisis has pushed the stock market to calibrate itself and is a primary reason for the recovery from its lows in March. Investors have become overly optimistic about the economy. However, markets never tell you in advance if there will be a bear market.
With the new rules from SEBI, what is your advice to small investors?
SEBI’s new norms came into effect on 1 September to help prevent the misuse of the funds and securities of investors. The change in margin system and pledging and repledging of securities can undoubtedly bring disruptions in the volumes of daily trading. All small investors are advised not to transfer any securities to the broker account for margin purposes apart from pay-in purposes against sale transactions. For margin purposes only, shares can be pledged from the investor’s account in favour of the broker, which could then be repledged by the broker in favour of clearing members/corporations.
Currently, what are your recommendations on the industries and stocks worth looking at?
It can be incredibly hard to pick the right stocks in the event of a global downturn. However, well-performing companies under sectors like pharma, IT, chemical, FMCG, and automobiles may represent investment opportunities that may be ripe for the picking. While the global economy has taken a hit, the aforementioned sectors are poised to convert threat into opportunity and are set to witness enormous growth in the post-Covid phase.
What is your view on the first half results and how will this influence the market?
Typically, stock market and economic performance often align and due to the Covid-19 pandemic crisis, the results will probably not be favourable, except for specific industries, and that might affect the market negatively.