The CIO of Tata Mutual Fund said that despite best efforts, short-term movements in portfolio stocks do not always matter as risks arising from global macros are inherently unpredictable.
Providing an outlook for the equity markets in Calendar Year 23 based on the impact of sectoral views and macro scenarios, CIO-Equities, Tata Mutual Fund, Rahul Singh said that at the current valuation premium, India's relative performance in the short term and 2023 What happens in me becomes a function of it. Shallow vs deep recession in rest of world ie US/UK/EU and pace of recovery in China after reopening.
Slow recovery in China coupled with shallow recession in US/UK/EU may be best case scenario for India as it may maintain India's valuation premium with limited impact on corporate profits. A deep recession could take a toll on Indian economic growth, even as it would ease inflationary pressures from input costs. Conversely, a global rebound led by China would reduce India's valuation premium despite strong domestic fundamentals," he said in a note.
Despite best efforts, short-term changes in portfolio stocks don't always make sense because risks arising from global macros (extent and nature of recession, geopolitics) are inherently unpredictable. Therefore portfolio construction has to be done to ensure that it survives an uncertain period ahead of us, he advised that, "In short, our advice to investors in 2023 would be to: ii) Keep core allocation in Balanced Advantage funds, iv) Broad- Exposure to schemes that benefit from the economy based economic growth and investment cycle."
Discipline, coordination and getting the right breathing will be key and not just moving the arms and legs faster and there will always be times when running faster will yield better results like in 2021 or 2017, Singh said, adding that it looks less likely in 2023 We are entering a high interest rate regime.
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