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India’s equity market started the new year on a strong note with the key indices hitting their respective all-time highs. However, market encountered volatility in the second half of January as there was some disappointment on the corporate earnings front.
Will this volatility continue in the month of February?
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 Mahesh Patil, CIO, Aditya Birla Sun Life MF have to say:
Ashutosh Bhargava, Fund Manager and Head Equity Research, Nippon India MF
Outlook
- Market is likely to remain within a narrow range. Some consolidation in near term is expected as corporate earnings have been mixed while broader markets have already run up quite sharply
- Corporate earnings, monetary policy outlook from major central banks including the US Fed and the RBI and movement in crude oil prices remain important variables for the market in near term
- Valuations are not inexpensive in general across size categories. Financials as a sector has reasonable price value gaps. Barring PSU banks and some PSU companies, valuations for rest of the market remain a bit elevated
Promising sectors
- Domestic demand oriented sectors including banks, auto and auto ancillaries, utilities and pharma look promising
Fund recommended
- Multicap and Flexicap funds can give decent returns. Asset allocation funds like multi asset fund (MAF) and balanced advantage fund (BAF) can also be explored for lumpsum investment
Christy Mathai, Fund Manager- Equity, Quantum MF
Outlook
- The domestic flows continue to be resilient but foreign flows are pretty uncertain and volatile. One can expect moderate returns from the market
- Domestic triggers include how the private capex cycle and rural recovery picks up. Globally, the stance of US fed on rate cuts is to be monitored
- Valuations in large caps are a tad bit higher compared to what was seen in the past. Caution is warranted for mid and small as they are highly expensive at present
Promising sectors
- Banking, IT and automobile are preferred sectors
Fund recommended
- Majority of allocation to large caps is recommended with value tilt, smaller allocation of about 15% can be made to small and mid-cap
Krishna Sanghavi, CIO, Equity, Mahindra Manulife MF
- Sentiment wise, Indian markets are very positive and hence, one needs to be careful about any event driven dampener for markets
- The key triggers are global monetary policy action led by US Fed, geopolitics, oil price implications, Indian general elections and corporate earnings outlook. Outcome on Foreign Direct Investment (FDI) and corporate capex cycle also need to be monitored.
- Large cap looks fairly valued while mid and small cap indices look expensive
Promising sectors
- Power, oil and gas, capex, metals and mining look promising
Fund recommended
- Flexi cap, large & mid cap, focussed funds are preferred categories
Mahesh Patil, CIO, Aditya Birla Sun Life MF
- Markets are expected to consolidate after the rally. Also, with interest rates expected to decline, growth could outperform value
- Fiscal policy is expected to remain loose globally as more than 60% of the world population goes for elections this year
- Strong rally from mid-and-small caps have pushed the valuations above historical average thereby warranting caution in the near-term. Large cap valuations seem reasonable
Promising sectors
- Domestic manufacturing, discretionary consumption, banking and financial services, digital/technology are preferred sectors. Automobiles, pharmaceuticals and power also look promising
Fund recommended
- Large caps, flexicap, multicap can be a suitable choice
