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September saw significant global events, including rate cuts by major central banks and stimulus measures from China aimed at injecting long-term liquidity. Domestically, markets reached new highs mid-month before witnessing some volatility towards the end. What will happen in October? Let's hear from five equity experts on what investors can expect in the coming month.
Christy Mathai, Fund Manager- Equity, Quantum AMC
Outlook
- US Federal Reserve's rate cut was a key event in September, with global markets progressing on strong footing post it
- Any escalation in the geo-political conflicts and the US election outcome can add to market volatility
- China's growth measures supported sectors like metals
- IT and FMCG sectors performed well on anticipated demand recovery
- Markets continue to trade above historical valuation bands; most sectors barring financials are trading expensive
Recommended funds
- Multi-asset funds recommended due to high market valuations
- Within equity, preference for funds with large-cap bias
Deepak Ramaraju, Senior Fund Manager, Shriram AMC
Outlook
- Key events that impacted the markets were the monetary policy review by the US Fed, ECB and Bank of Japan
- Any surprise measures taken by SEBI can impact the short-term performance of domestic equity markets and can see short-term outflows
- However, the cut in interest rates and fall in the US Dollar will drive long-term FII inflows into Indian equities. The monthly SIP flows and liquidity will continue to drive the markets
- Given the stretched valuation, one can expect a stock-specific impact when the earnings are reported and the markets to remain sideways with a positive bias in the short to medium term
- Corporate earnings, commentary from the management and festive demand will be the key factors for the market performance in the medium term
- On the contrary, any escalation in the geo-political conflicts and the US election outcome can keep the markets volatile.
Recommended funds
- For medium term: Balanced advantage or multi asset allocation funds
- For over 3 years: Flexi cap or multicap funds
Shridatta Bhandwaldar, Head – Equities, Canara Robeco AMC
Outlook
- In the medium term (3/5 years), we remain constructive on Indian equity market
- Nominal GDP growth likely to be ~10%
- Strong public capex over last 4 years has created investment side momentum
- Public capex is expected to translate into private capex cycle, given strong corporate balance sheets
- Real estate, a large segment of economy continues to do well
- Banks continue to have strong balance sheets to support the possible capex and real estate cycle
- Governments focus on manufacturing is likely to drive medium term earnings growth in the economy
- However, the near-term valuation at 15-30% premium as compared to historical valuation continues to be a worry
Recommended funds
- Given relative valuation comfort in the large caps, consumption pocket; one may choose equity fund categories like large cap, flexi cap, consumption theme etc.
Ajay Khandelwal, Fund Manager, Motilal Oswal AMC
Outlook
- Rising crude oil prices, driven by geopolitical tensions added pressure on sectors like aviation and transportation
- Currently, India stands out among emerging markets
- Globally inflation has been cooling down as developed world has embarked on the rate cutting cycle
- High forex reserves providing insulation from global volatility
- Indian markets becoming less correlated to global markets
- Sectors such as new age tech, digital, EVs, renewable energies, defence and luxury consumption will do well
- Valuations on large caps are at 10-year average and are sustainable
Recommended funds
- Multi cap and flexi cap would be a better proposition for investors in the current times
Trupti Agrawal, Fund Manager, WhiteOak Capital AMC
Outlook
- Over the next quarter, the key events to watch for would be the progression of corporate earnings, outcome of state elections in Maharashtra and Haryana and trajectory of festive season trends
- From a global perspective apart from any actions by the Fed, the outcome of US Presidential elections would also matter, as well as the incoming macro data in the US
- India’s nominal GDP growth rate is expected to be low double digits going forward
- Above average monsoons leading into the busy festival season augurs well for near-term demand
- BFSI sector with a focus on the private lending financial companies will do well
- Key risks to market are geopolitical tension and volatility in oil prices
Funds recommended
- Banking and Financial Services funds
- Flexi cap and large cap funds
