This market correction has once again taught us not to get too caught up with narratives, not to extrapolate strong earnings momentum into too many years out in the future and not to fall for valuations that are being justified by discounting earnings 3-5 yrs out instead of current and next year earnings.
This correction has however done nothing to take away from the big themes that will continue to drive our markets in the coming years: infrastructure, manufacturing, discretionary consumption, financialization of savings and digitization.
Venugopal expects the heavyweights of Nifty 50 to change significantly in the coming 5 years – from banks, IT and consumer staples to manufacturing and consumer discretionary stocks. Ensuring you invest in the right side of this big move is therefore very important.
While macro numbers have now begun looking up, Venugopal says markets would want to see continuing momentum in GDP growth and front ending of Government capex in FY25-26 to gain confidence in RBI’s 6.7% GDP growth estimate for FY25-26.
HSBC MF’s equity fund performance – which was strong till Dec 24, took a bit of a hit in this quarter’s sharp correction in mid and small caps. Venugopal is confident of performance bouncing back in the near term.
Their newly launched Financial Services Fund will be fully invested in the coming days. Expect a little more tilt towards lending rather than capital market related businesses as cyclicality and regulatory changes have taken a toll on revenues of stock market related businesses.