Good Time For Long-Term Investors To Build Portfolio, Says Aditya Birla Sun Life AMC's CIO
Markets are slightly oversold at this point, said Patil, adding that valuations are at a fair zone while the growth outlook is likely to improve.
It's a great time for long-term traders to invest. The markets are not going to go up in a hurry, said Mahesh Patil, chief investment officer, Aditya Birla Sun Life Asset Management Co. It will be a good time during any market dip— in the next three to six months— to build portfolio for next three- to five-year period, according to Patil.
The NSE Nifty 50 is already down 15% from its peak, and small and midcap indices are down around 20%-25%. The valuation for the Nifty 50 is somewhere near the long-term average or slightly below it, which indicates that it's a good time to invest, explained Patil.
Markets are slightly oversold at this point, said Patil, adding that valuations are at a fair zone while the growth outlook is likely to improve. In the middle of the calendar year 2025, markets will remain range-bound, he said.
"It's not suggestible to be aggressive on the market in terms of risk. The focus should be on the large-cap and flexi-cap space, especially for investors who are investing in mutual funds. The market breadth will remain weakened for some time. It's also advisable to adopt a multi-asset allocation strategy," Patil added.
Indian markets started the correction much earlier. When Donald Trump came to power in the US, market participants witnessed the dollar index rally and sell-off in emerging-market assets. Indian economy has also started to slow down early compared to the world.
"Some of the factors that were hurting the growth - they have started to normalise. The Reserve Bank of India is being accommodative. They have done a rate cut and are now trying to infuse liquidity into the market with open market operations and forex swaps. The restrictive measures that were imposed on banks are now easing. While the fiscal continues to consolidate, the focus is on consumption. All these factors will help markets to recover from a macro perspective," said Patil.
Another factor is earnings growth, which was downgraded this fiscal year to as much as 5%. When growth comes back to the economy, earnings growth will also get back to 12–13%, according to Patil. "So, most of the negative domestic factors are behind us; the recovery is inevitable."
A slowdown in the US can impact a few sectors in the market that are export-orientated. However, the dollar's strength, which was hurting earlier, is gone now, added the CIO.
