If your portfolio requires a churn then this is the right time as we are on the verge of a breakout above previous record highs
If you have an all-equity portfolio then it makes sense to evenly distribute your money in various sectors, and not be focused on just a few sectors.
If your portfolio requires a churn then this is the right time as we are on the verge of a breakout above previous record highs.
Both Sensex and Nifty are less than 3 percent away from their respective record highs, and if the momentum continues we could touch those levels in March series itself.
Election-specific volatility will continue and experts advise investors to remain with sectors that are showing strong momentum and will continue to do so.
The important point to keep in mind is the sectoral weight in the portfolio. If it is too skewed towards one sector then the fate of your portfolio will also be dependent on the performance of that particular sector.
Financials is one sector which tops the list for most brokerage houses. In financials, experts feel that private banks should outperform PSU Banks and NBFC peers, given the advantages of liquidity and quality franchise.
Goldman Sachs in a recent note said that they have increased the cyclicality in their sector allocations and upgraded PSU banks, industrials and autos to overweight. It downgraded tech, metals, and NBFCs to underweight. Thematically, Goldman prefers domestic cyclicals over defensives and exporters.
Among financials, Goldman Sachs upgraded PSU Banks to overweight given sharp improvements in asset quality trends, attractive valuations and likely pick-up in credit growth (as banks come out of narrow banking/PCA and likely gain some market share from NBFCs).
Anecdotal evidence also confirms that capital goods, banks (private and PSU) and autos perform well during an election year, Elara Capital said in a note.
We asked experts as to how would they distributed Rs 100 in different sectors:
Analyst: Shivendra Foujdar, Founder and Managing Partner, Avighna Trades
If this is an all-equity portfolio then one should allocate 30 percent in banking, especially in PSU banks like PNB, Canara Bank, Bank Baroda and SBI.
Apart from that, 20 percent in auto & auto ancillaries which include stocks like M&M, Bajaj Auto, Hero MotoCorp, GNA Axle and Motherson Sumi.
20 percent into infra and real estate-related projects like DLF, NCC, NBCC and IRB Infrastructure. 10 percent in cement stocks which are related to infra projects. Cement is the essential commodity to participate in a country's growth.
10 percent in beverages sector like UBL, United Spirits, Radico Khaitan. And lastly, advertising & media is also a good sector to invest in so remaining 10 percent should go to stocks like Zee Entertainment, TV-Today, and TV-18 Broadcasting.
Analyst: Dinesh Rohira. Founder & CEO at 5nance.com
We will allocate about 30 percent towards FMCG and two-wheeler sectors which have presence in rural geographic.
We expect agri-based specialty chemical sectors (stock-specific) to benefit from recent freebies announced by the government for rural farmers and should have an allocation of about 20 percent in the portfolio.
Investors can also allocate about 30 percent to select housing finance and private banks that provide an opportunity for investors to benefit from a rebound in credit growth, and also likely to benefit from falling borrowing cost.
Further, government's thrust for Digital India is likely to benefit IT sectors (stock-specific) through massive spending on this front in medium term and thus should allocate about 20 percent in the portfolio.
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