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Equity markets remained volatile in April due to the quarterly earnings results and geopolitical tensions in West Asia.
In terms of market movements, mid and small-cap markets rallied again recovering their March’s losses.
However, the election season has begun and it is expected to set the tone for the markets in the days to come.
What will happen in May? Let's hear from experts Amit Premchandani, Senior Vice President and Fund Manager - Equity, UTI MF, Ashish Naik, Fund Manager, Axis MF, and Sumit Bhatnagar, Fund Manager, Equity, LIC MF.
Amit Premchandani, Senior Vice President and Fund Manager – Equity, UTI Mutual Fund
Outlook
- Banking sector results are better than expected till now, showing stability in margins and better than expected profits
- IT sector remained subdued, lacking visible growth. However, a few select companies are expected to do well on account of marginal pick-up in growth
- Geopolitical tensions impacted market volatility
- The return on equity (RoE) of Indian market increased from 10% to over 15% over last 4 years
- Large-cap companies offer reasonable value, especially in banking and financial services
- While overall large-cap valuations are slightly expensive but still within a reasonable range, while mid-cap and small-cap segments are relatively more expensive
- Earnings growth expectations are around 14-15%
Recommended sectors
- Banking and financial services
- Pharma and healthcare
Recommended funds
- Funds like large cap bias and Multi-asset allocation and balanced advantage funds are recommended
Ashish Naik, Equity Fund Manager, Axis Mutual Fund
Outlook
- Indian equities faced volatility over the month driven by quarterly earnings outlook and geopolitical stress in West Asia
- The performance of companies and the elections are two important factors to monitor, as they will have an impact on market dynamics
- Interest rate fluctuations globally and in India may have a significant impact on the market
- On a macro level, manufacturing and capex are the key things that will determine India's long-term success
- Key benchmark indices have been touching all-time highs every month and liquidity has been leading to higher valuations
- Rising market, pre-election rally and valuations continue to remain concerns for investors
- India is still seen as a good place to invest due to relatively higher earnings growth, robust GDP growth outlook, political stability and consistent policies
Recommended sectors
- Industries with a domestic manufacturing focus, utilities and infrastructure are expected to grow
- Positive outlook on the consumer discretionary sector, with a focus on the real estate and automotive sectors
- Maintain positions in sectors like power, defence and transportation which stand to benefit from governmental initiatives
- Banking sectors are anticipated to experience a rise
Sumit Bhatnagar, Fund Manager, Equity, LIC Mutual Fund.png)
Outlook
- India's economic story looks promising with a projected GDP growth of 7.6%, exceeding expectations
- Corporate earnings are expected to grow by double digits fuelled by a strong election mandate and healthy demand
- Stable policies and increased spending should boost both corporate investments and consumer spending, leading to a positive market trend
- Key factors driving the market include decent corporate earnings, anticipated rate cuts in the third quarter of the fiscal year and upcoming elections
- Large-cap valuations are around their long-term averages. Mid and small-cap valuations may seem stretched but they are supported by expected earnings growth
Recommended sectors
- Sectors like capital goods, infrastructure, metals and defence will do well
Recommended funds
- For investors, consider mid-cap funds for an investment horizon of 5 to 7 years
- Small-cap funds for an investment horizon of 7 to 10 years
- Large-cap funds for an investment horizon of over 3 years
