In a market hitting fresh highs everyday, investors still remain uncertain, said Amit Nedkar, Senior Fund Manager, LIC MF, in an interview with Shaleen Agrawal and Zoya Springwala. The markets have more than doubled over the past two years, he added, saying that the worst is behind us and the market is likely to see good times ahead.
Sectoral Outlook
Nadekar is bullish on financials and IT. In 2022, the IT sector began correcting as a result of stretched valuations and the sector is still around 20% down from its peak. The BFSI sector is doing well and has high growth potential. Private banks could grow in mid-teens as corporate NPAs improve. However, following the post-Covid spike, the FMCG sector is seeing lower demand growth on the rural front while margins continue to stress the sector.
How investors should position their portfolio
It is of utmost importance that investors remain invested in their SIPs, emphasised Nadekar, believing the worst is behind us, leading to ‘good times’ for the equity markets. When asked if he believed a correction was on the horizon, he resonated that it would be futile to predict the markets. However, as an example of the importance of remaining invested, he said that if Nifty 50 rallied 20% from current levels, and then corrected 8%, investors would have still missed the boat. Therefore, instead of attempting to time the markets, traders should put in their money in tranches, so as to maximise the benefits and retain the ability to reinvest as they see fit.
Potential risk factors
While the Russia-Ukraine war has exited news headlines, the war is still being waged and any spillover effects could adversely impact the markets, said Nadekar. The conflict is one of many possible geo-political risks to the ongoing rally. Additionally, while the markets have just broken out of their year-and-half long time-correction, earnings downgrades could lead to a consolidation. Other factors flagged as risks are the upcoming 2024 Lok Sabha elections, agricultural impact of El Nino, and subsequent food inflation.