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The equity market is on a rally and touching new highs. But will this rally sustain or move otherwise?
In this regard, Cafemutual reached out to industry experts who shared not only their views but only sectoral and fund preferences to get an understanding of what to expect in the coming month.
Alok Singh, Chief Investment Officer, BOI MF
Overall view - Markets may look stable in the near term. June 2023 quarter corporate results and monsoon will guide the market from here. Apart from these, there are no major risks visible as most of the factors that could have resulted in rate hikes and inflation are addressed.
Further, the valuation in small caps space appears more attractive than in large caps whereas, mid caps are more richly valued currently.
Promising sectors - We are overweight on financials and capital goods and underweight on IT, oil and gas sectors. Also, we are neutral on pharma and auto.
Preferred fund categories - Given the relative attractiveness of small caps, investors with a longer term view may consider small cap funds subject to their risk profiles.
Asit Bhandarkar, Senior Fund Manager - Equity, JM Financial MF
Overall view - Recent global central bank actions and commentaries may lead to the markets to cool off a bit here. Also, we are expecting more visible signs of corporate capex acceleration into the second half of FY 24. Further, improvement in FII inflows along with stronger consumption trends remains a major trigger.
On the valuation front, midcaps and small caps have moved up. And in the large cap space, the valuations are neither cheap nor expensive.
Promising sectors - We are overweight on the manufacturing sector as we bet strong on the impending capex cycle. Additionally, financials and commodity users such as autos, consumption etc. are likely to do well.
Preferred categories - Investors could opt for flexicap and midcap funds to take maximum benefit of opportunities available in the Indian economy. For patient investors having the ability to take some volatility, value funds may present superior risk-rewards.
And for investors who expect lower volatility versus a pure equity product, equity hybrid funds are an ideal solution.
Shibani Sircar Kurian, Senior EVP & Head- Equity Research, Kotak MF
Overall view - In near term, the market could witness some consolidation. Corporate earnings delivery remains one of the key triggers in addition to inflation in India and US, its impact on monetary policy globally and foreign and domestic flows. We must also keep an eye on the progress of south west monsoons, kharif crop output and signs of recovery in rural India.
Also, in the last three months, midcaps have outperformed large caps and the relative valuation of midcaps to large caps is currently above long term averages.
Promising sectors - Domestic facing sectors like BFSI, capital goods/ industrials, cement, automobiles and homebuilding appear promising.
Preferred categories - Investors should continue to invest in equities in a disciplined manner through SIP or STP. For lump-sum investment, it is advisable to evaluate categories like balanced advantage fund or an equity savings product which leaves the asset allocation decision to the fund manager.
And in terms of market capitalisation, we are marginally over weight on large caps and marginally under weight on mid and small caps
