Indian equity markets have had a phenomenal run in the last five months
on the back of the decisive mandate received the BJP led NDA
government. The first Union Budget presented by the new government
amply addressed the strategic need to improve the investment climate by
emphasising on measures to create a framework for low & stable inflation,
setting fiscal deficit on a sustainable path through tax & expenditure
reforms and setting up a broad based inclusive growth framework for a
sustainable market economy. In this scenario, we expect many sectors,
particularly among cyclicals (banks, infrastructure, capital goods, power,
etc.) to enter a new phase of upturn in terms of financial performance as
de-bottlenecking of the policy logjam and a conducive operating
environment will drive the financial performance. Investment in midcap
funds should help capitalise on this opportunity. However, given markets
have already rallied sharply in a short span of time, investors should utilise
market corrections to accumulate midcap funds in the portfolio with
overall allocation limiting as per their own risk profile.
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