Longer term vision for India's macro remains positive; the `Lollapalooza Effect` at play: Motilal Oswal Private Wealth
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Key Insights:
* The strategy for Equity is toinvest 50% in lump sum and 50% in a staggered manner over the next 3 months in Multicap strategies and select Mid & Small Cap strategies (MFs, PMS, AIF) to achieve strategic equity allocation.
* ~70% - 80% of the Fixed Income portfolio should be biased towards high quality short to medium term accrual strategies with minimum investment horizon of 3 years. Within the above allocation, 20% - 30% can be allocated towards long maturity and high quality roll down strategies with minimum investment horizon of 5 years.
The Alpha Strategist by Motilal Oswal Private Wealth(MOPW) highlighted thatthe domestic Equity market fundamentals remain robust given healthy balance sheets, low debtequity & improving ROEs leading to steady earnings growth outlook. The longer term vision for India's macro remains positive with gradual progression toward a $6 trillion economy over the course of this decade.
Nifty50 ended FY22 with gains of 19% YoY, marking another year of strong returns. Given the multitude of challenges (regional lockdowns due to the second COVID wave, gradual withdrawal of excess global liquidity, relentless rise in commodity prices, disruption in supply chains, and weak rural demand), the fact that the Nifty is down barely 5% from its recent high underscores its resilience. Markets never fail to astonish and what has been a pleasant development is the rise of DIIs investing in equities to the tune of over $26 billion in FY22 countering the outflows by FIIs ($17.1 billion).
BFSI & IT companies have been somewhat immune to the geopolitical crisis and could continue to do well; Metals & Mining companies have benefitted on the back of unyielding rise in commodity prices while the same has had a negative impact on consumption driven companies. Autos, consumer staples and cement could see a decline in margins due to rising commodity costs in Q4FY22 results while upstream Oil & Gas as well as Metals could see a sharp uptick during the same period. Almost half of NIFTY 50 companies would not have any direct impact of rising energy prices on its last quarterly results while 29% will have a positive impact and 18% would gain from rupee depreciation. On a high base, Nifty50 Q4FY22 PAT is expected to go up 23%.
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