Markets have been extremely volatile in the last few months thanks to weak global cues but they have managed to hold their own. Money managers believe this resilience will continue at least till the end of the year.
The Market Sentiment Survey conducted by Moneycontrol shows 60 percent of money managers see Nifty ending the year above 18,000 level and 10 percent above 18,500 level. Rest see the index below 17,000.
On October 21, Nifty clocked some gains to reach 17,630 despite pressure from declining rupee that has broken all records. Seventy percent of the polled fund managers – across the mutual fund and portfolio management services industry - said the rupee will strengthen a bit to end the year between 80-82 per dollar while the rest saw it above 82. Currently the rupee is hovering close to 83.
Crude oil price is another risk that India has to factor in. Increases in crude price not just impact a country's fiscal math but also lead to an increase in raw material cost for manufacturers and ultimately to higher prices for products and services.
Seventy percent of money managers believe crude oil will end the year in the $85-95 per barrel range. Currently at $93 per barrel, the commodity trades towards the upper end of this projection.
However, one positive thing that has worked for the market is that the ongoing earnings season has so far turned out better than expected. And the sector that has been under the spotlight during the season is banking thanks to stellar credit and deposit growth reported by lenders across the board. Money managers are also banking on the sector for generating alpha in their portfolio.
In the survey, 40 percent of respondents said they were most optimistic on the banking sector for the two year horizon while 30 percent picked automobiles as their favourite pick for the same period. Twenty percent see most upside in the defence sector while 10 percent in chemicals.
Where they are not bullish is some of the sectors that have seen heavy selling recently. Forty percent of the respondents said they are least optimistic about metals followed by new age tech firms where 30 percent see no chance of making money in the next two years. Ten percent each are bearish on IT, pharma, and FMCG.
Amid all these positives and negatives, just 10 percent of fund managers said it was time to stay away from equities while 40 percent cautioned investors to be stock-specific. Half of them were pro equities.
Apparently, they are also walking the talk. Sixty percent of respondents said they are holding five percent or less cash in their portfolio, while 30 percent said they have five to seven percent cash. Just one fund manager seems to be waiting on the sidelines, holding 15 percent cash in the portfolio.
The Moneycontrol Market Sentiment Survey polled 10 domestic fund managers for this assessment who manage up to Rs 4.4 lakh crore worth of assets.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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