The stock markets are "still looking attractive" and it would not be a surprise if a breather is seen in the next few months, said Ashish Shanker, the managing director and chief executive officer of Motilal Oswal Private Wealth Management. At this juncture, flexi-cap funds would be the most-recommended investment vehicle, he added.
In the near term, the markets "have run up", and this is not due to liquidity alone, but also due to the fact that the fundamentals have kept pace, Shanker said, during an interaction with Moneycontrol on August 30.
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"In September 2021, the Nifty was around 18,000 plus levels and today you're at 19,400. Today you're at least 25% cheaper on a fundamental basis than you were at 18,400. So earnings have gone up 30% during this period, whereas markets have broadly remained flat. So fundamentally speaking, the markets are still attractive," the expert explained.
However, with the kind of run-up seen over the last three to four months, "I wouldn't be surprised if markets do take a breather here over the next few months," he added.
Why flexi-caps?
Although multi-cap funds "make more sense" amid the prevalent market situation, flexi-cap funds would be "on top of my recommendation list at this juncture", Shankar said.
The reason being that flexi-cap funds have the flexibility to decide whether they want to invest in larger companies, medium-sized companies or smaller companies and that flexibility rests with the fund manager, he added.
"Multi-cap funds have a restriction. They can be 50% in large cap and rest they have to be in mid and small cap. They're also not a bad option, but flexi cap funds would be on top of my recommendation list at this juncture," the Motilal Oswal official further stated.
Bullish on physical capex-themed investments
Shanker sounded bullish on investments that are being made in sectors that involve physical capital expenditure on a significant scale.
"The world as well as India has under invested in physical capex in the last decade. So we see a lot of activity around manufacturing, the real estate as a sector has picked up quite well. Quarter on quarter, you're seeing all-time high volumes in terms of units sold. You are seeing a lot of action from government to improve the infrastructure and railways, improve the road infrastructure. I think investment-related companies clearly stand out and I think they will do well over this decade," he said.
Real estate is the "main capex", Shankar stated, adding that stocks around this sector "will definitely do well".
The market veteran also noted that it would require more time for IT stocks "to become really attractive from a fundamental basis".
The street has, latestly, shown signs of pessimism related to the IT stocks. On being asked whether it was the appropriate time to buy into that fear, Shankar said "it's still not like a no brainer buy", despite the kind of uncertainty that is there in the broader system, whether it's the US or Europe.
"You might have a bounceback because the stocks have been beaten down quite a bit, but I would say that they're still not cheap," he added.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.
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