Indian markets were "remarkably resilient" in 2022 to reach record levels, said Sailesh Raj Bhan, deputy chief investment officer - equity investments, Nippon India Mutual Fund, in an interview with Business Standard. However, he cautioned investors to expect moderate returns in 2023 as global uncertainties remain.
"The resilience of Indian markets has been quite remarkable, as the markets scaled record-high levels amidst heightened global volatility. The global risk-off phase led to sharp outflows from global and emerging market equities. Indian markets also weathered one of the sharpest phases of selling by foreign investors, and yet after some weakness during mid-2022 have sharply rebounded to scale fresh highs," stated Bhan in his interview.
He further pointed out that the financialization of household savings into equities directly or through a vehicle like Mutual Funds, PMS has been unprecedented, lending strong support during the global risk-off period.
Going ahead, Bhan said that he sees an environment where both inflation and growth might be slowing.
"India most likely will again emerge as the fastest-growing economy with perhaps limited macro volatility. Yet, near-term global uncertainties are unlikely to wither away soon and therefore it would be wise to have moderate return expectations in the near term," he advised.
Earnings can remain challenging for some time as global growth is weakening and local economic conditions after a strong recovery post Covid can come back to normal trends, he further highlighted.
Given the domestic growth, fundamentals are much better placed than others. India-centric themes like banking, non-lending financials, travel & tourism, engineering, etc. appear interesting, he said. At the same time, some mean reversion may be possible across areas like healthcare, staples, IT, etc., added Bhan.
He advised investors not to be too distracted by the current narratives and focus on the risk-return possibilities of each asset class along with one’s risk appetite & time horizon while deciding on the allocations.
A market correction can create potential opportunities for long-term equity investors, said Bhan.