If there is a market correction, however, it will offer excellent long term wealth building opportunities.
Sandeep Tandon-led Quant Mutual Fund is adopting a risk-off approach to the markets, even though they believe the Indian stock market is full of opportunities amidst global uncertainties.
In its monthly note to investors, the fund house wrote, “The resilient Indian stock market is brimming with opportunities amidst global uncertainties. Visionary government policies to support trade, economic development and a fast rising entrepreneurial spirit are drawing an increasing share of foreign investments into India.”
However, in light of ‘perceived risks’ such as the rally in the dollar and ‘unknown risks’ such as geopolitical tensions, over the past three months, the construct of the Quant Mutual Fund portfolios are “more skewed towards a mild risk-off environment and liquid and defensive stocks as the impact cost is rising”.
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While the global risk appetite indicators have improved for India, they have decreased for developed markets, US in particular. Therefore, according to Quant MF, implied volatility for cross assets, cross markets will remain elevated in Q3 CY 2024.
“Overall, liquidity is high but a marginal downtrend is visible in select geographies and this is not consistent with global economists’ fear of an upcoming world recession,” added the brokerage in its September Factsheet.
However, with India’s government spending, all-round economic growth will see a boost and a favourable monsoon “may well be the cherry on the cake”. All the positives in the country outweigh the global negatives.
Domestic positives will outweigh global negatives and investors should be patient in terms of rewards expectations, avoid speculative investing and should stick to disciplined investing through Systematic Investment Plans (SIPs).
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If there is a market correction, however, it will offer excellent long term wealth building opportunities supported by strong fundamentals and improving corporate performance, said the brokerage.
“Our medium term outlook is constructive and sector rotation will play a key role while our long term outlook is bullish with a buy-on-dips strategy,” explained Quant MF.