Global markets that witnessed deeper corrections in 2022 could fare better than India over the next few years, said Kunal Kapoor, chief executive officer of Morningstar, in an interview with Business Standard.
Kapoor noted that while the developed markets seem attractive from a 3-5-year time horizon, some emerging markets which saw heavy selling last year can do well.
"Considering that India's relative outperformance in 2022 has kept the valuations on the higher side, the country may underperform over the next five years compared to markets that went through major corrections in 2022," Kapoor said.
Since Indian equities relatively outperformed last year and interest rates have been increased, equity allocation can be trimmed and invested in fixed income, he advised.
"We always advise investors not to worry too much about short-term volatility and try to game it. Indian investors have always gained by investing in equities with a long-term view. There's no need to do anything dramatic right now. Shifting the allocation slightly towards the debt from equity is the only thing I would suggest," suggested the market expert.
Talking about foreign investor inflows, he stated that in 2022, risky assets were sold across the world, irrespective of the return prospects. India's performance was relatively better but it still saw outflows, he added, as per the report.
Investors are still looking for stability around global inflation and interest rates and unless that happens, inflows seem difficult although outflows may subside. If you are a long-term investor, these things shouldn't matter as India is still partly attractive, he highlighted, said the report.
According to Kapoor, 'buying and holding' is always the right strategy.
“The investments should be in sync with the goals and time horizon. The fact that India has not seen a sustained downturn in the recent past may have given investors the confidence to hold on to their investments during corrections. Whatever the reason, if investors are buying on the dip that's a positive," he said.