Top five sectors which are looking attractive post recent correction

As attractive as PSU banks may seem, we would recommend sticking to private banks i.e. if one wants to invest in the banking space.

 

The selloff by foreign investors (FIIs) that we have witnessed in the recent past is expected to be offset by the liquidity flows into equities from the domestic household savings. We believe that as long as this remains strong, volatility should remain curbed to a large extent.

However, given the high expectations from the earnings – as gauged by the higher multiples that the markets are garnering – as well as the many state elections lined up this year; we expect 2018 to be fairly volatile.

The year will not be anything like 2017, where we saw a run up across the board. A stock specific approach is the way to go.

A good way to have sector-wise allocation would be to mimic the benchmark indices – such as the Nifty 50 or the BSE – 100 or 200 indices.

As attractive as PSU banks may seem, we would recommend sticking to private banks i.e. if one wants to invest in the banking space.

We remain positive on the agri/ rural plays, consumption themes, housing theme as well as the infrastructure space.

A lot more information would be required (such as already existing investment and savings profile, the lifestyle of the investor, the risk appetite, his knowledge on equity investing) to answer such a question.

Let us go with the assumption that the candidate mentioned above has no savings, we would recommend a staggered approach towards investing in equities rather than investing all the amount in one go.

By the end of one year, the investor should have at least 30-40% of his money in fixed income and the balance split between MFs and equities (direct).

While banks will look to pass on the prices, keeping a gauge on the asset quality will be critical.

MORE WILL UPDATE SOON!!