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Research Capview Fast Lane – February 2024

Fast Lane – February 2024

Written by - Fisdom Research

February 19, 2024 2 minutes

A Closer Look at Valuation Concern

Here’s the rationale behind justifying the current market valuations

Factors driving the market’s premium valuation relative to other nations:

  1. Robust economic growth compared to other countries. India has the highest real GDP growth at 7.6% among emerging markets.
  2. A promising outlook for strong corporate earnings.
  3. Witnessing robust demand across various sectors
  4. The banking sector exhibits improved stability and resilience.
  5. Anticipating positive trends in private capital expenditure cycles
  6. The ruling party’s favourable performance in state elections contributes to market sentiment.
  7. Strengthening market confidence for political stability, anticipating continuity of macro policies in the 2024 general election.

Investor Actionable

Rather than avoiding the markets, concentrate on active participation through intelligent portfolio strategies.

Asset Class Views
EquityNeutral – Bias PositiveBottom-up opportunities still exist. Follow 60:20:20 when it comes to large, mid and smallcap allocation. It’s a buy-on-dip market.
DebtOverweightFollow Barbell Strategy. Overweight on duration play. Reduced fiscal deficit projections, coupled with global bond inclusion and decreased gross borrowing, will likely have a positive impact on the bond market.
GoldNeutral: Bias PositiveSuggested to buy on the dip. Maintain it as a strategic allocation.
Real EstateNegativeOpting for investments through REITs and realty stocks might be the favorable choice.
International EquitiesNeturalMaintain it as a strategic allocation; avoid going overweight.

Don’t Avoid Midcap & Smallcaps

While midcaps and smallcaps may be trading at premium valuations compared to large caps, certain focused sectors and stocks within those sectors are exclusively available in the midcap and smallcap segments.

IndustryLargecapMidcapSmallcap
Oil & Gas
IT Services
Banks
Insurance
Automobile
Pharma
Construction Materials
Passenger Airlines
Capital Markets
Building Products
Machinery
Biotechnology
Media
Entertainment
Semiconductor

Preferring Domestic Cyclicals

Domestic sectors outpace global counterparts in remarkable growth

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