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May ended on a positive note with market hitting new highs. While there was volatility during the beginning of the month, a big rally in one of the largest conglomerates contributed to the growth of the market.
The good news now is that many fund managers are comfortable with the valuations and seeing attractive opportunities in the small and mid-cap space.
To decode the market further and give you clarity on equity markets, Cafemutual spoke to industry experts. Read on to know their views.
Abhishek Gupta, Fund Manager, Edelweiss Mutual Fund
Equity outlook and triggers for the markets
- Consumption to pick up by the end of this calendar year. Until then, the market will predominantly remain in a consolidation zone
- The monsoon is always a relevant factor, particularly in terms of rural & semi urban demand and consumption
- Small cap funds offer attractive opportunity for 2-3 years
Promising sectors
- Lending financials, building materials, automobiles, capital goods and cement
Funds to recommend
- Considering the recent underperformance of the small-cap category, we foresee good alpha opportunities in this space over the next 24-36 months
- For slightly more risk-averse investors seeking lower volatility and holding a horizon of 5 years or more, a diversified portfolio like large & mid, flexi funds can make the cut
Hardick Bora, Co-Head of Equity at Union Mutual Fund
Equity outlook and triggers for the markets
- Cautiously positive on the equity markets from a medium-to-long-term horizon, i.e., beyond 3-to-5 years
- Nifty is currently trading at a moderate premium to fair value. Given the decent growth expected in this fair value, equity markets are an attractive asset class at the moment
- Key triggers - Corporate India’s business outlook, government’s continued focus on capital expenditure and economy’s stronger growth potential
Promising sectors
- Consumer discretionary as private consumption is expected to boost up
- Industrial consumables, industrial products and capital goods will see good business momentum over the next 5 years
- With stronger balance sheets and adequate capitalization at hand, banking and NBFCs to do well
Funds to recommend
- Invest across large, mid and small cap segments in diversified funds
Sanjay Chawla CIO - Equity Baroda BNP Paribas Mutual Fund
Equity outlook and triggers for the markets
- The US debt ceiling and Covid situation in China are the two major global events that can impact markets
- The developments on the monsoons will be the key to Indian markets. A good monsoon would help in easing pressure on agriculture production and thereby helping rural demand
- Easing of headline inflation on back of soft food prices and correction in global commodities could help the economy going ahead
- Valuations have corrected with most indices now getting in to comfort zone
Promising sectors
- Positive on 3Cs – Consumer, Capex and Credit
Funds to recommend
- Small cap funds and mid cap funds may be more volatile compared to large cap funds but could give better returns in long term
- Investor with moderate risk appetite can look for multi cap funds and low risk appetite can look for large cap fund
