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January 2023 marked the start of the Q3 earnings season. As expected, the earnings season posed mixed results and brought no specific cheer to the market.
So does the ongoing earning session continue to be the key market trigger? Or are there other events that will define the market in the near term?
Let’s see what the experts have to say.
Alok Singh, Chief Investment Officer, BOI MF
Overall perspective - Currently, there is consolidation taking place due to the ongoing earnings season and the upcoming union budget. In addition to the budget, the outcome of the forthcoming MPC (Monetary Policy Committee) and US Fed meetings are the key market triggers. However, given the overall global scenario and the expected outcome of these events, the market may react positively.
Also, with the recent correction, there is some amount of moderation in the market. But relatively speaking, small caps may appear to be attractive in the long run.
Recommended sectors - Economy-centric sectors like banking are likely to perform well.
Suggested funds/style - Investors with a time horizon of up to two years can opt for large cap funds and where the time horizon exceeds five years, small cap funds make more sense. For a horizon of more than two but less than five years, investors can consider a mix of small, mid and large cap funds.
Amit Nadekar, Senior Equity Fund Manager, LIC Mutual Fund
Overall perspective - Corporate earnings and inflation trajectory are the two most important triggers for the markets going ahead. Besides, the union budget could be a short-term trigger.
On the valuation front, while the market is evenly balanced, one cannot call current valuations either cheap or expensive. Mid cap valuations remain elevated mainly due to continued domestic mutual fund inflows and the narrowly defined 150 stocks space. On the other hand, small-cap space remains more attractively valued and at a discount to both large and mid-cap space.
Recommended sectors - We are positive across consumption, travel and tourism, manufacturing, capital goods and infrastructure. Additionally, banks and auto appear promising.
Christy Mathai. Fund Manager - Equity, Quantum MF
Overall perspective - Markets are likely to be volatile in the near term due to a host of events lined up i.e. the union budget, policy action across the globe and an uncertain geopolitical environment.
In terms of valuation, the same remains marginally higher across market capitalizations despite the recent bout of correction. In fact, some of the excesses from the low interest regime have still not corrected in certain pockets like staples/durables/internet. However, given the elevated interest rate across the globe as against the past decade, we expect the valuation to moderate in these expensive pockets.
Recommended sectors - We remain overweight on financials with a decent mix of holdings in both lending and non-lending names. We are also positive on IT services and consumer discretionary especially two wheelers, which trade at an attractive valuation.
Suggested funds/style - Value as a style is likely to do well in the medium term.
