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February month ended on a good note for the equity market with key indices touching new highs. While the market witnessed some volatility due to outflows from foreign investors, consistent inflows through SIPs subsided its impact last month.
Will the trend continue or is correction underway? Let us know from our expert fund managers - Ashish Naik, Equity Fund Manager, Axis Mutual Fund, Asit Bhandarkar, Senior Fund Manager (Equity), JM Financial Mutual Fund and George Thomas, Fund Manager – Equity, Quantum Mutual Fund.
Ashish Naik, Equity Fund Manager, Axis Mutual Fund
Outlook
- Equities saw gains with the Nifty hitting record highs and mid and small-cap stocks are trading at higher valuations compared to large caps
- Foreign portfolio investors (FPIs) withdrew funds, but monthly SIP flows exceeded Rs.18,000 crore and are expected to continue
- India's robust GDP growth remains attractive to investors
- The budget confirmed the government's plan to reduce the fiscal deficit by 5.1% by FY25
- Mid and small cap stocks are trading at higher valuations compared to large caps with strong domestic investment flows
Promising Sectors
- Sectors like infrastructure, manufacturing, utilities and pharmaceuticals have done well and we are also positive on consumer discretionary sectors like automobiles and real estate
- Opportunities in sectors such as power, defense and transportation, which could benefit from government policies
Funds recommended
- Mid and small cap investors should consider moving a portion of their investments to large cap funds
Asit Bhandarkar, Senior Fund Manager - Equity, JM Financial Mutual Fund
Outlook
- February 2024 witnessed increased market volatility causing the momentum to pause
- Returns in small and midcap stocks slowed down compared to larger stocks
- Global central banks decisions on interest rates will strongly influence the market, potentially boosting investor confidence in emerging markets if rates drop
- The recent trend of lower input costs that benefited companies may be fading, which could lead to slower profit growth in the near future
Promising sectors
- Investing in renewable energy looks promising and the manufacturing sector seems to be the trending sector for investment
Funds recommended
- Aggressive hybrid schemes are suggested for those looking to capitalize on market volatility while flexi-cap funds are suitable for long-term investors
- Investors with a medium to long-term horizon may find SIPs in midcap funds profitable
George Thomas, Fund Manager – Equity, Quantum Mutual Fund.png)
Outlook
- The interim budget was positive for the markets with lower than expected fiscal deficit numbers
- Focus on infrastructure development but slight cuts in food and fertilizer subsidies raised rural economy concerns
- Consumption indicators remained neutral with a shift toward discretionary spending
- Valuations are expensive across majority of sectors
- Supportive factors may reverse, especially for smaller companies, leading to a range-bound market
- Opportunities in large-cap segment with short-term challenges
Recommended Sectors
- Private banks offer reasonable valuation
Funds recommended
- Large-cap funds may do well
