Overseas investors remain in selling mode, but fund managers handling money of the rich are advising investors to deploy cash in select stock market themes after the recent correction. Most of them are bullish on corporate banks, housing and telecom sectors.

Mumbai: Overseas investors remain in selling mode, but fund managers handling money of the rich are advising investors to deploy cash in select stock market themes after the recent correction. Most of them are bullish on corporate banks, housing and telecom sectors.

ET spoke to fund managers of seven Portfolio Management Services (PMS). Within equities, these money managers are more inclined towards large-caps amid the looming uncertainty of the new coronavirus variant, inflation risks and liquidity withdrawal by central banks. “This is a good time to deploy money. In top companies a correction has happened to the tune of 15-20%, and more than 45% of companies where the market cap is ₹250 crore and above have corrected close to 20-25%,” said Amit Doshi, Investment Director, CARE PMS.

Stock indices have declined 7% from record highs with the emergence of the Omicron variant and global monetary policy tightening, keeping investors on the edge. On Friday, the Nifty ended down 204.95 points, or 1.2%, at 17,196.70 and the Sensex ended down 764.83 points, or 1.3%, at 57,696.46.

It will be critical for the Nifty to cross 17,500, if the previous week’s rebound from 16,800-levels must sustain, said analysts. Near-term sentiment is jittery with foreign investors dumping stocks since October. But, selling by overseas funds have been partly cushioned by flows from domestic investors. As long as fixed income returns remain subdued, many investors might prefer equities, said PMS fund managers. “There’s a lot of money on the fence,” said Vikaas Sachdeva, chief executive officer at Emkay Investment Managers. “If you are an investor, you should buy on dips and in midcaps one should be selective and buy quality.”

What Fund Managers Say

Amit Doshi, Investment Director, CARE PMS

The froth has got trimmed down. For investors, this will be a good entry point. Pharma sounds like a better play as it has not participated in the rally since April, but overall action will be stock-specific not a sectoral play. The China Plus One theme can do well. Look for opportunities in the textile sector on some corrections there. Investors with a five-year view with ability to withstand volatility can have a 50-60% in mid- and small-caps. Since June-July, we have been holding 15% cash which we are starting to deploy now.

Manish Sonthalia, Head Equities-PMS, Motilal Oswal

Best way to go about it is to deploy in multi-cap. Keep a proportionate balance in large-cap and mid-cap. That’s the most optimum solution provided investors have a three-year view. The pillar of earnings growth in the next two three years is going to be led by technology, cyclicals including capex recovery investment related themes, auto, cement and banking. Real estate is likely to do well as they come out of several years of degrowth.

Aditya Sood, Fund Manager, InCred PMS

There are value pockets as mid-caps have corrected 30-40%. So it is a good time to put bottom-up ideas to work. This is going to be a buy on dips market. Corporate profitability is in a mid-cycle. Fixed deposit investors are looking at equity to generate some return. We already have seen some correction. Chemicals and mid-cap IT are clearly overheated. There are opportunities in financials, healthcare, discretionary consumption and auto. I have 40-50% in large-caps in our multi-cap portfolio.

Manish Bhandari, CEO, Vallum Capital Advisors

The economic momentum will ensure that money does not leave the market in hordes while valuation discomfort will encourage sectoral rotation. Most likely, the market will see time value correction. One of the pockets which will do well will be MNCs operating in the manufacturing segment and domestic plus export story. Large-cap to small-cap ratio is trading at 10% below its peak. So have a cautious view on small-caps.

Amit Gupta, Fund Manager – PMS, ICICI Securities

One can scatter Investments till the upcoming Budget. We are looking at capital goods, corporate-linked banks, domestic pharma and technology stocks. Mid- and small-caps are overheated in some patches like metals and chemicals. One should look at the 70:30 ratio in favour of large-caps. If the consolidation phase gets prolonged, then mid-caps may see correction.

Siddharth Vora, Fund Manager- PMS, Prabhudas Lilladher

If investors have made a lot of profit in the past one and a half years, a multi-asset approach to reinvest equity profits is a sensible decision. Spreading your bets across asset classes which are not correlated with a higher bent towards equity would probably be the way to go. Housing, corporate-focused banks, telecom and IT should be in the allocation. I would be most focused on large-caps, secondly on mid-caps and then make a minor allocation to small-caps.

Vikaas Sachdeva, CEO, Emkay Investment Managers

In the last few years, there have been a series of announcements which have structurally changed the way the economy has to grow. The next 8 to 10 years belong to emerging markets. It is a great opportunity to enter the market.

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