In an interview with ETMarkets, Aggarwal said: “This allocation should be adjusted based on personal financial goals, time horizon, and changing market conditions. Regular portfolio review and rebalancing are crucial to maintain the desired risk-return balance,” Edited excerpts:
Thanks for taking the time out. After a 2% rise seen in September in Nifty50, October started off on a volatile note thanks to geopolitical concerns. How are you viewing markets?
After September’s 2% rise in Nifty50, October began volatilely due to geopolitical concerns. Markets are currently facing challenges from multiple fronts. China’s stimulus has prompted FPIs to shift investments from India to China, causing selling pressure.The Middle East conflict has driven crude oil prices up by 9%, potentially impacting inflation. Additionally, Indian equity markets, especially mid and small caps, were trading at expensive valuations, making a correction inevitable.The broad-based fall was anticipated. Considering these factors, Client Associates (CA) continues with its Neutral stance on overall markets and Underweight stance on Mid and Small Cap category.
Investors should remain cautious and monitor global developments closely.
SEBI has come down sharply on F&O trading to safeguard retail investors interest. Do you see this a move in the right direction?
SEBI’s sharp crackdown on F&O trading is generally a move in the right direction. It aims to protect retail investors from significant losses, as studies show 93% of individual traders incur losses in F&O trading.
The measures will likely promote more long-term investment approaches and reduce excessive speculation. However, it may also decrease market liquidity and impact legitimate hedging strategies.
While the move safeguards retail investors’ interests, its overall effectiveness will depend on implementation and market adaptation.
This could be the much-needed correction/fall which everyone was waiting for. Any sectors or themes which investors can look at if they have a long-term time horizon?
This market correction indeed offers opportunities for long-term investors. While focusing on high-quality and growth companies in the Indian large-cap space is prudent, it’s also important to maintain a diversified portfolio.
A disciplined approach to investing in fundamentally strong companies across various sectors can yield better results over time.
Do you see FII money flowing towards China as India appears expensive now?
While some FII money may shift towards China due to its cheaper valuations and recent stimulus measures, India’s strong fundamentals and domestic inflows are likely to limit any major outflows.
India remains attractive for long-term investors despite higher valuations. The FII reallocation between India and China is expected to be moderate rather than drastic in the near term.
Which sectors are you overweight and underweight on?
While we at Client Associates don’t typically focus on specific sectors, our investment approach emphasizes the GARP strategy.
This method allows us to identify high-quality companies with sustainable long-term growth potential across various sectors.
We prioritize companies that demonstrate consistent earnings growth and reasonable valuations, rather than concentrating on particular industries.
This approach enables us to build a diversified portfolio of promising stocks that align with our clients’ long-term financial goals.
If someone plans to invest say Rs 10 lakh (in the age bracket of 30-40 years) after recent fall. What should be the right asset allocation?
While age is a factor, investment decisions should primarily be based on an individual’s risk profile. For risk-seeking investors, a balanced approach is advisable.
Allocating 70% to high-quality large-cap stocks can provide growth potential while managing volatility from ongoing geopolitical situations. The remaining 30% in debt markets offers stability.
However, this allocation should be adjusted based on personal financial goals, time horizon, and changing market conditions. Regular portfolio review and rebalancing are crucial to maintain the desired risk-return balance.
What is your call on crude oil? If the crude oil picks up because of geopolitical concerns our macros could take a hit. Your take?
Given the heightened geopolitical tensions in the Middle East, particularly the ongoing Israel-Palestine conflict, oil prices have significantly increased.
This will likely impact India’s macroeconomic indicators, potentially leading to higher inflation and an increased Current Account Deficit (CAD). Consequently, the reduction of interest rates in India may be further delayed.
However, considering India’s strong economic prospects, this shouldn’t be viewed as a significant long-term challenge. The country’s diversified oil import sources and robust forex reserves provide some cushion against these external shocks.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)