Shibani Sircar Kurian, Head of Equity Research and Fund Manager at Kotak Mahindra AMC, has advised investors to use market corrections to add to equities, even as volatility is expected to persist amid the conflict in West Asia and uncertainty over the global economic outlook.
Kurian said valuations had become more reasonable in large-cap stocks and select mid-caps following the recent correction. She is slightly overweight on mid-caps and neutral to slightly overweight on large-caps, while remaining selective about small-caps, where valuations are still elevated despite improving earnings.
“What we have been advising our own investors is to use market corrections to add to equity,” Kurian said in an interview with CNBC-TV18.
She recommended maintaining a broadly neutral asset allocation while using market declines to increase equity exposure.
Earnings to drive stock selection as volatility persists
Kurian expects volatility to continue in the near term as the conflict in West Asia affects the inflation outlook and adds to global macroeconomic risks.
She said market volumes had picked up during the current month as volatility increased, although it was too early to determine whether the trend would continue over a longer period.
Looking ahead, she expects a fairly robust Q2 earnings season, following a good performance in Q1. She believes earnings growth will be a key driver of stock performance as investors increasingly focus on individual companies rather than the broader market.
While we contend with near-term volatility, I think this is becoming more and more of a bottom-up stock-picking market, where earnings growth is likely to be a key driver.SHIBANI SIRCAR KURIAN, HEAD OF EQUITY RESEARCH AND FUND MANAGER AT KOTAK MAHINDRA AMC
Banks, industrials and healthcare among preferred sectors
Financials remain among Kurian’s preferred sectors, with banks expected to see an improvement in earnings going into FY28. She cited stronger balance sheet growth, better margins and credit costs remaining largely contained as factors supporting the outlook. She also considers valuations in the sector attractive.
Capital goods and industrials are other areas where she sees opportunities, although she remains mindful of valuations. She said some pockets of these segments continued to offer strong growth prospects.
Kurian is also positive on parts of discretionary consumption and healthcare, including hospitals. Despite near-term regulatory uncertainty, she expects the hospital sector to maintain a strong growth trajectory.
Capacity additions, particularly through greenfield projects, and improving occupancy levels are expected to support earnings growth. The recent correction has also made valuations more attractive, in her assessment.
“While we may have to navigate some near-term volatility, structurally, our view on the sector remains positive,” she said.
IPO selection to remain stock-specific
Kurian said the supply of shares through initial public offerings (IPOs) and qualified institutional placements (QIPs) had remained strong over the past few months and quarters.
However, she said Kotak Mahindra AMC continued to evaluate each IPO on its own merits rather than taking a broad view of the primary market.
The fund house focuses on business quality, management, earnings prospects and valuations, while assessing whether a company fits its investment philosophy.
Kurian said the approach was to be selective rather than treat all IPOs alike, with earnings, management quality and valuations remaining central to investment decisions.
Watch accompanying video for full conversation.
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