Global headwinds are weighing on investor sentiment, but Mihir Vora, Chief Investment Officer at Trust Mutual Fund, believes domestic fundamentals are still intact on the back of the upcoming festive season and likely deals with the US, and suggested that investors should not stay on the sidelines.
Vora said that the markets are in a situation where oil is up, and so are global bond yields, which is certainly dragging the overall global equities and bond markets. Having said that, there are some potential positives. It looks like India is not going to be hit by the Trump tariffs for buying Russian oil, which is a huge relief. That was one of the big hanging swords over the market.
Triggers the market is waiting for
Moving ahead, there are reasonable indications that India is somewhere close to doing a trade deal with the US, which can be a huge trigger for the market. These are a couple of triggers that the markets are waiting for, and also need to see how the festive season pans out. “We are right in the middle of it. Things seem to be okay,” said Vora.
Attention will then shift to the December quarter, where the key question is whether demand and margins hold up despite the headwinds, particularly on the elevated base created by last year’s GST cuts. “I think markets are probably in wait-and-watch mode,” he said.
Not bearish, but not euphoric
Domestically, things look good, but because of global headwinds and inflation issues, markets are kind of taking a breather. Asked whether this is a buying opportunity or whether markets could be capped from here, Vora struck a balanced note.
“I’d say things are not absolutely hunky-dory, ” he said, but things are not negative either. The domestic consumer demand as well as the private sector investment cycle seems to be holding up quite well. “I would not be too bearish on the market, especially given that valuations are no longer an issue,” he added, whether it’s large caps, mid-caps, or small caps, as a lot of froth has already gone out of the market.
Be selective: stock- and sector-specific
On the back of good valuations, decent domestic fundamentals, and global headwinds, Vora advised investors to be selective. His suggested approach is to go stock-specific and sector-specific, build a list of stocks one wants to own, and keep accumulating during bouts of volatility that drag the market lower.
Don’t wait for a correction
Whether investors should wait for macro conditions to improve, or even buy 5% higher, or instead put all their chips on the table now, Vora said waiting has historically been costlier than investing. “A lot more money has been lost by trying to wait for the next correction,” he noted. Corrections tend to be sharp and short, while uptrends last longer, so those waiting for a dip risk missing opportunities. “Definitely don’t stay out of the market,” he added.
But again, it’s not the time to be going all in also. Instead, make your list of stocks or mutual funds or themes that one wants to be in and keep adding to them starting from this point in time on the way up also and if there’s a correction on the way down also. “I would say that don’t try to time too much, but don’t go all in today,” he said.