In an exclusive interview with Zee Business, Reshma Banda, Head-Equity & Executive VP, Bajaj Allianz Life Insurance touched upon multiple points and suggested market participants focus on bank stocks and new-age segment – the former mainly due to improving asset quality and the latter due to rapid growth in a niche category and may find a place in new-age fund portfolios.

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The market expert also outlaid the markets’ roadmap for the rest of the year and pointed out measures on what should be done to protect investors’ portfolios in a falling market.

Below are the excerpts of a complete interview

What would you suggest to the market participants with respect to their portfolio management in a weak market?

Markets are witnessing volatility across the globe and India has been no exception. Geo-political tensions, resurgence of covid-19 in select regions, persistent high inflation across developed and emerging economies, the gradual withdrawal of global liquidity support and an increase in policy rates by global central banks have contributed to the correction in the capital markets across countries. Volatility is an inherent characteristic of the capital market and it is imperative as an investor to not get bogged down by this factor. If you are going to invest on a regular basis in the markets, then it is critical that you follow a disciplined approach that could make the volatility work in your favor.

When following a systematic/consistent investment plan of participating in the markets by a fixed amount on a monthly/quarterly/annual basis, then there is a possibility that the intermittent fall in market would average out the investment cost over a period of time. Asset allocation is an additional tool that helps in protecting the overall portfolio and diversifying across asset classes may be considered. Each asset class has its own attributes and appropriate allocation can maximize the overall portfolio’s Risk Adjusted Returns in the long-term. Overall, policyholders/investors should be cognizant of their long-term goals and should re-balance the investment plans to enable them to remain on the path of reaching their life goals.

Which sectors should be under investors’ radar and can be explored in a falling market? Some trading ideas?

We are finding value in select banks and consumer sectors. Banking sector which had been plagued by poor asset quality, is now witnessing a normalization of credit costs and valuations are below the longer term average. New age sectors that are growing rapidly in niche segments of the market which are garnering market share should also find place in the new age fund portfolios of the future.

Both benchmark indices have slipped over 7% year-to-date around 9% in six months. How do you see the Sensex and Nifty50 would pan out for rest of the year?

The corporate earnings have been exceptionally strong in FY21 & FY22 with upgrades being witnessed across sectors, including commodities. We expect earnings to remain buoyant in FY23 and are estimating an earnings growth of 16%. The market is trading at 19x on a forward price earnings basis, which is at a marginal premium to the long-term market average. We believe that there is limited scope for earnings upgrade and expect FY23 to be a year of moderate returns.

The overall weak sentiment has also impacted the primary market so far this year. How do you see the public issues are positioned in 2022? Would touch the same level as last year’s?

With an increase in global policy rates and a tepid response to the recent IPOs, the appetite for IPOs has come down. Further, we have seen many large ticket issues being completed in the last year. The trend observed across most of the last year was a surge in new issuances by new age tech businesses which had scaled up rapidly. Going forward we expect this trend to continue with increased digital adoption in India.

How do you see the rate tightening by global central banks, including RBI have on the domestic equity market in the view of multiple factors?

We are in a phase where global central banks have started hiking interest rates to tackle inflation which has been rising across countries. In a rate increase cycle, we could observe some demand slow-down as the focus of countries is to control inflation and not on growth inducing measures.