Cut your near-term expectations from equities; Fed may go for a rate cut in early 2024, says Ajay Tyagi of UTI AMC

livemint.com:

The valuations of the Indian stock market are currently higher than they usually are in the long run. This means there might be a correction soon. If you're thinking about investing in stocks in the short term, it's a good idea to lower your expectations. However, if you're planning to invest for the long term, sticking with your regular investments (SIPs) is still a good choice, said Ajay Tyagi, the head of equity and fund manager at UTI AMC. In an interview with Mint, Tyagi talked about which sectors can perform better going ahead and what is the road ahead for mid and small-caps. Monsoons in August have been the worst in a century and as a result, the overall rains for this year would be sub-optimal.

This may lead to concerns around food inflation and thereby delay reduction in policy rates. General elections can of course lead to near-term uncertainty and have a sentimental impact in the short term, although from a medium to long-term perspective the fundamentals of the Indian economy are not contingent on which party forms the government at the center. The valuations for the Indian markets are higher than the long-term averages and therefore a correction cannot be ruled out.

From a near-term perspective, it would be prudent to cut our expectations from equities although for long-term investors continuing with their SIPs is the best option. Inflation has been coming down in the US slowly yet steadily. The underlying strength in the economy is preventing inflation from collapsing but we are getting close to the target levels with each passing month.