Add defensives to your portfolio over next 6 months: Sunil Subramaniam

economictimes.indiatimes.com:

Sunil Subramaniam, MD & CEO, Sundaram Mutual, says “we are in for a correction and volatility in the broader market, but it is not because investors are turning risk averse. It is because FIIs are selling largecaps. Mutual funds, in order to buy those largecaps, need to sell mid and smallcaps. It is not necessarily a reversal of risk attitude as much as the opportunity to get good quality, large companies at much reasonable prices. So it is just a reallocation. For a long-term investor, in fact the on-going correction could be a good time to accumulate.”

Crude prices have eased off a bit at the start of the week. How do you see this correlation between crude prices and the kind of consolidation that we are seeing on the Nifty play out from here?
The spot crude prices may ease up based on local announcements but if you look at the forward crude expectations, they remain in a firm stage both because it is winter setting into the US and in Europe, when the energy heating demand for homes goes up. The Israel-Hamas conflict is adding to the statement by OPEC that there will be at least a three and a half million barrel shortfall for Q4. So in the short term, because of China's slowdown, there may be movement in the spot crude, but otherwise I expect a firm crude trend.

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So that affects hedge fund flows into countries like India because we import 83% of our crude. They take a forward view because what happens when crude firms up is that our currency comes under pressure and the