Opportunities ahead in Indian equities, hybrid, large-cap funds recommended
Even as the Indian stock market faces sharp ups and downs, big opportunities may be lying ahead, according to a report.
In its latest strategy report, Motilal Oswal Private Wealth (MOPW) remains optimistic about equities in both the short and long term.
The firm suggests that investors should continue to invest in large-cap and hybrid funds through lump sum investments while deploying funds into mid- and small-cap stocks in a staggered manner over the next six months.
The recommendation comes as recent market corrections have brought down large-cap valuations below their 10-year average.
"The ongoing corrections have resulted in valuations of large-caps falling below the 10-yr average on a 1-year forward basis," Motilal Oswal Wealth Limited MD & CEO Ashish Shanker noted.
He added that while mid and small-cap indices are still trading at a premium, pockets of opportunities are emerging there as well.
"Evaluation of current scenario suggests that factors/reasons which might have caused this correction in Indian equities have either subsided or largely been factored in," Shanker said.
The report points out that recent government measures to boost consumption are expected to support economic growth.
However, corporate earnings in the third quarter of FY25 have not been strong enough to revive overall market sentiment.
"Indian equity markets are currently in a consolidation phase. The global economic uncertainties, US tariffs, and a strong dollar have contributed to market volatility. Despite these challenges, the government measures aimed at increasing consumption can boost India’s economy," the report mentioned.
The brokerage house believes that more clarity on economic challenges will emerge in the first half of the year.
Given the current market conditions, the firm advises investors to be patient and selective with their equity investments. It stresses the importance of making strategic decisions while navigating market fluctuations.
"Considering the recent corrections, if Equity allocation is lower than desired levels, investors can increase allocation by implementing a lump sum investment strategy for Hybrid & Large Cap funds and Staggered approach over the next 6 months for Flexi, Mid & Small cap strategies with accelerated deployment in the event of a meaningful correction," the report stated.
