WhiteOak Capital’s Somaiyaa Flags Financials, Healthcare, Consumer Discretionary As Key Overweights
Somaiyaa further cautioned that even though domestic conditions have improved, investors should remain prepared for potential volatility ahead.
Financial services, healthcare and consumer discretionary sectors are likely to lead the next phase of market growth.
That's according to WhiteOak Capital AMC Chief Executive Aashish Somaiyaa, who cited the current valuations and economic trends as reasons for the firm’s overweight positions in these areas.
“So we don’t track any specific sectors, but yes, if I tell you where we are overweight, that will give you an indication. One is financials– banking, capital markets, insurance and NBFCs. Then healthcare and consumer discretionary. The fourth is industrials– capex, manufacturing, etc. These are our top overweights,” Somaiyaa told NDTV Profit in an interaction.
Somaiyaa also said that he doesn’t think that the upcoming data for domestic mutual fund inflows will see any major fluctuations, which will be closely watched amid broader economic uncertainty.
“I don’t think there’s any big trend change you’ll see in the April data. Gross equity flows may stay in the Rs 60,000–70,000 crore range, with redemptions around Rs 30,000–35,000 crore. Even when markets dip, net inflows remain stable. I don’t expect any significant shift in the numbers,” the analyst said.
He further explained that the market resilience is largely due to improving external macros and the RBI’s supportive stance. “I think in recent times, resilience has got a lot to do with the change of our external macro and the change of RBI’s stance. If you look at fundamentals, there wasn’t much expected from the last quarter, and results have been in line. I would credit this resilience to currency appreciation,” he said, adding that currency appreciation is typically accompanied by more confidence from foreign investors.
Somaiyaa also predicted that even though domestic conditions have improved, investors should be prepared for potential volatility ahead.
“I believe that, from time to time, there will be volatility and downside because geopolitics is not over yet. Even if India is close to signing a free trade agreement with the UK…there’s the 90-day moratorium, China, the European Union, and things are still in discussion. With the US and Chinese economies slowing down, globally we’re not out of the woods yet,” he said.
In September, when the Nifty was at 26,200, WhiteOak had 24% in equity, 23% in gold and the rest in fixed income. Since then, equity allocation has risen to 31% while gold has dropped to 13%.
Explaining this decision, Somaiyaa said, "All of this change is for two reasons. One is because equity valuations came off. Secondly, when yields come off, you can tolerate higher valuations. So, equity allocation increases as yields decline. The journey played out from a peak of 26,200, down by 5,000 points to 21,500, and then an up move. If the market stays like this, models may suggest reducing equity."
