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Given the recent market rally, especially in the mid cap and small cap space many are keen to know if the charged bull will maintain its momentum or will it lose its grip. Also, what is the ideal investment philosophy that can help to navigate an inherently volatile market?
To get answers to these, we reached out to industry experts who shared with us the overall market outlook and recommended fund categories.
Christy Mathai, Fund Manager - Equity, Quantum MF
Overall view - India’s economic resilience and policy stability as against other emerging markets will continue to attract Foreign Institutional Investors (FII) in the medium term. Corporate earnings, global interest rate environment, valuations and flows will be the key triggers for the market hereon. However, given the sharp rally in the recent past, especially in the small and midcap segments, some pockets have become expensive. Thus, we suggest being cautious in the near term.
Promising Sectors - Given the cyclical recovery in the Indian economy, consumer discretionary especially 2-wheelers, financial sector and IT services appear promising. The banking sector is likely to benefit as the broader capex cycle picks up.
Recommended funds/strategies - Owing to the sharp run-up in the small and mid cap category, large cap-oriented portfolios look attractive.
Mahesh Patil, CIO, Aditya Birla Sun Life MF
Overall view - Favourable macroeconomic factors and reversal of FII flows have played a key role in the market rally. With moderation in inflation and sustenance of the GDP growth rate, further interest rate hike is unlikely. Going forward, markets will be driven by global macroeconomic environment and continued earnings delivery.
Promising Sectors - Domestic-focused themes like banking and financial services, consumption, healthcare and domestic manufacturing are likely to perform well.
Recommended funds/strategies - A multi-asset approach with exposure to equity, fixed income, and gold is well-suited for the current environment.
Sumit Agrawal, Senior Vice President, Bandhan MF
Overall view - The initial quarterly results have been a mixed bag, and we look forward to more trends as the earnings season progresses. In terms of valuation, mid and small cap segment have become moderately expensive due to the recent run-up. However, the large cap space still looks reasonable as most of the large sectors like financials and tech have not participated in the rally.
Promising Sectors - We are bullish on the domestic side and financial services, auto and low-ticket consumption space looks promising.
Recommended funds/strategies - It is advisable to have an asset allocation-driven approach.
Vinay Paharia, CIO, PGIM India MF
Overall view - The market is trading at a premium to its current fair value which is likely to grow at a strong pace. Hence we are cautiously optimistic from a medium term perspective, where fair value remains the key market trigger. Also, post the recent rally, we expect a better upside in the large cap and small cap space.
Promising Sectors - We are positive on domestic consumption and manufacturing sectors like financials, healthcare and consumer discretionary.
