The bull market can be attributed to the lack of investment opportunities in other asset classes. Till the time US yields remain low, investors will be encouraged to take risk. But investors need to be prepared with proper asset allocation regardless of how good the market is doing. Valuations are not cheap and equity is a much riskier asset class as compared to March 2020.
Neelesh Surana, Chief Investment Officer, Mirae Asset MF
The earnings growth in the large and mid and small-cap segments is almost similar. If the risk adjusted returns between large and midcaps are similar, then one should prefer higher allocation towards large caps. Midcaps do offer tremendous opportunities on a bottom-up basis, and thus should be about onefourth or one-third of overall allocation.
Jinesh Gopani, Head of Equity, Axis MF
Valuations are on the higher side but offering higher growth and ROE. Tech companies are offering double-digit growth for the next two-to-three years and some money is moving from financials to technology. About 40% of the Nifty is export-driven and money is moving towards non- domestic plays. Organised players are gaining market share.
Nilesh Shah, MD, Kotak Mutual Fund
Sentiment has improved because the virus seems to be under control in most states. Valuations are still not expensive going by Nifty’s FY22 EPS estimates. That said, investors must not have excessive exposure to small- and mid-caps. While equities are still the most preferred asset, there will be a stage when investors will move some money from stocks to real estate.
Vinit Sambre, Head of Equities, DSP Mutual Fund
Valuations are high but are supported by growth in earnings both in large-caps and mid-caps. One needs to temper return expectation in the near-term due to high valuations and invest with a three-to-four year view to participate in the broad-based economic growth which is likely to benefit the mid- and small-cap categories as well.
