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November turned out to be good for equity markets. Despite global uncertainties, the broader market performed well on the back of strong earnings and optimism.
Will the markets continue its rally in December or it will see some surprises due to surging food inflation, state election results and geopolitical tension?
Let’s see what experts - Ashutosh Bhargava, Fund Manager and Head Equity Research, Nippon India MF, Christy Mathai, Fund Manager- Equity, Quantum MF, Krishna Sanghavi, CIO Equity, Mahindra Manulife MF, and Trideep Bhattacharya, CIO- Equities, Edelweiss MF have to say about the equity markets for the coming month.
Ashutosh Bhargava, Fund Manager and Head Equity Research, Nippon India MF
- In the near term, there are no major downside triggers which may result in rally to continue in Calendar Year 24
- State election results, crude oil prices and earnings result of the third quarter are key things to watch out for
- In terms of valuation, large cap companies offer reasonable value
Sectors
- Banks, power, automobiles and capital goods offer good price value gaps
Recommendations
- Flexi caps and large cap funds should be preferred in diversified space. Asset allocation funds like multi asset fund and balanced advantage fund should also be considered
Christy Mathai, Fund Manager- Equity, Quantum MF
- There is limited scope for valuations to re-rate and market is likely to be driven by earnings growth. Pockets within mid/small caps look expensive and large caps are relatively well placed
- Major triggers include recovery in rural demand and consumption, government capex sustainability and pick up in private capex. Global slowdown in developed economies also needs to be tracked
- Small cap and mid cap category have outperformed amid the global easing policy actions. This was triggered post US banking crisis and strong margin outperformance driven by input cost moderation. Also, large caps are likely to recoup some of the underperformance with respect to mid/small cap category
Sectors
- Financials are expected to do well especially the banks. Technology and auto are promising with reasonable valuations
Recommendations
- Core equity portfolio should be fairly liquid and more inclined towards large cap with value bias and further incremental allocation can be made towards growth/mid and small caps
Krishna Sanghavi, CIO, Equity, Mahindra Manulife MF
- Key triggers could be results of the Indian state elections, outcome of the US Fed meeting and crude oil prices amidst the geo-political uncertainties
- Major risks could be inflation, change in RBI's stance on monetary policy, worry over poor monsoon this year and low water reservoirs, especially in southern India
- Large-cap as a segment is reasonable in terms of valuation while mid-cap and small caps are at a relatively higher valuation
Sectors
- Power, capital goods, electronics and manufacturing, financials and consumers are some of the promising sectors
Recommendations
- Large caps, flexi cap & focused funds are good for investors
Trideep Bhattacharya, Chief Investment Officer- Equities, Edelweiss MF
- Indian corporations are currently undergoing a normalization of gross earnings margins, influenced by the decline in commodity prices
- Upcoming regional election outcomes in early December 2023, national election results in the first half of 2024 and corporate earnings for the December quarter are major triggers for equity markets
- While large cap stocks present a broad-based value proposition, one should be selective in choosing stocks within the mid and small-cap segments
Sectors
- Manufacturing, non-banking financials, defense, power and real estate sectors are expected to show resilience
Recommendations
- Multi-cap portfolios can offer the appropriate risk-reward balance for investors in the current scenario
