As investors navigate this volatile period, experts suggest a strategic focus on sectors like pharmaceuticals, FMCG, chemicals, and telecommunications, which are showing resilience and potential for growth.
After experiencing three consecutive sessions of losses, Indian markets saw a rise of around one percent on Wednesday. This recovery was driven by a broad-based rally supported by positive global cues and the government’s proposal to restore indexation benefits on property sales, which boosted investor sentiment. Additionally, markets are keenly awaiting the Reserve Bank of India’s (RBI) Monetary Policy announcement scheduled for Thursday, August 8. However, most experts anticipated that the Monetary Policy Committee (MPC) would maintain the current repo rates for the ninth consecutive time.
The Nifty had lost over 1,000 points in the previous three sessions. However, in today’s intraday trading, it soared by 345.15 points to reach 24,337.7.
Looking ahead, most experts predict some consolidation in the Indian markets in the near term due to high valuations. They advise investors not to panic or make hasty buy/sell decisions, emphasising a stock-specific approach and identifying value stocks with strong fundamentals.
“Following the volatility, the best idea will be to reduce exposure to high leverage and concentrate on quality assets with strong fundamentals. This should be done through diversification over different classes of assets and in various geographic regions. It will be essential to keep a close watch on central bank policies and currency movements in order to take an informed decision. In the prevailing market scenario, it is good to have some part of the portfolio in cash or liquid assets to use the flexibility to capitalize on new opportunities that will arise,” advised Anirudh Garg, Partner and Fund Manager at Invasset.
Sector Recommendations from Market Experts
Let’s take a look at what sectors market experts recommend in these volatile times.
As investors navigate this volatile period, experts suggest a strategic focus on sectors like pharmaceuticals, FMCG, chemicals, and telecommunications, which are showing resilience and potential for growth.
Divam Sharma, Founder and Fund Manager at Green Portfolio
Defensive sectors like pharmaceuticals and FMCG are always good for turbulent times, but we are not foreseeing a prolonged low run for the market. However, now is not the ideal time to look at or invest in new sectors but keep an eye out for good opportunities available everywhere.
Sonam Srivastava, Founder and Fund Manager at Wright Research
A market correction could accelerate a shift from cyclical to defensive sectors. Overvalued stocks in cyclical industries such as PSUs, defence, and railways are vulnerable to significant price drops. Investors might reallocate funds towards defensive sectors like capital markets, agrochemicals, and FMCG, renowned for their stability during economic downturns. Additionally, the pharmaceutical sector could emerge as an attractive investment due to its consistent growth and resilience. Furthermore, banks might benefit from potential rate cut prospects, which could boost lending activity and improve profitability.
Riya Oswal Bafna, Co-Fund Manager at Purnartha PMS
Chemicals is a sector which has not been the winner in the last couple of years, but recent earnings and reduced oil should boost this space. Pharmaceuticals and IT should show resilience. Also, the telecommunication sector has showcased exceptional numbers this quarter, thus, these would be the areas which can be approached in the current market.
In the face of recent volatility, the Indian stock market’s rebound demonstrates its resilience, yet investors should remain cautious. By focusing on sectors with strong fundamentals and adopting a diversified investment approach, investors can navigate these uncertain times. Keeping a portion of the portfolio in cash or liquid assets allows for flexibility to capitalise on new opportunities as they arise. While challenges remain, the long-term outlook for the Indian market is positive, with strategic investments expected to yield favorable returns.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.