Defensives to banking: Where investors can find comfort in current markets
ET Now: Give us a sense of where, if at all, you are seeing strength in the market right now. If we look at the week-to-date move across indices, pharma has ended in the positive. FMCG and IT have been among the least losing indices compared to others like metals, auto, and realty. Do you think defensives such as FMCG, IT, and pharma can continue to offer support? Would these pockets provide some comfort to investors struggling with where to allocate funds in a falling market?
Ashi Anand: If we look at the market construct, there has been a series of negative developments. The last quarterly earnings were weak, GDP growth for the last quarter was also below expectations, and the Fed’s outlook suggests a slower pace of rate cuts in the coming year. There is little positivity in the markets in the near term. However, the longer-term outlook remains strong.
In the near term, defensives like pharma, IT, and consumer sectors might act as safe havens. These sectors have underperformed over the past two to two-and-a-half years. During this time, markets were driven by real estate, capital goods, defense, railways, and other capital formation-related stocks, many of which have moved ahead of fundamentals. This is why we are seeing greater downsides in those areas. Smallcaps, in particular, had built up some froth, and we remain cautious there.
In the near term, defensives could serve as a «place to hide» during volatility. However, the longer-term picture for the Indian economy and markets remains very positive. We see
