Earnings season sparking volatility; 3 sectors to watch for turnaround: Shreyash Devalkar

economictimes.indiatimes.com:

Shreyash Devalkar, Senior Fund Manager, Axis Mutual Fund, says “in the relative context, the three main segments by weight in the largecap are FMCG, private sector banks, and some parts of IT. Here the valuations compared to their pre-Covid level are not really elevated and that is where everyone is watching out for a turnaround. Any turnaround, whenever it happens, definitely is a good development for these sectors.”

What are you making of the volatility which has suddenly sprung up? It has become a pattern almost that the day the markets hit a lifetime high, that very day they also fall quite a bit.
Shreyash Devalkar: As far as markets are concerned, when it comes to the movement, which we have observed over the last 1-3 year basis is that most of the stocks are pricing in a lot of positivities and especially from the valuation perspective, they are at an elevated level in mid, small and a section of largecaps as well.

Unlock Leadership Excellence with a Range of CXO Courses

So, barring probably FMCG and a portion of IT in largecaps and some private sector bank and NBFCs – barring these three pockets which constitute a large part of Nifty– the valuations are relatively elevated compared to their pre-Covid valuations. At such a juncture, normally, what we observe is depending on the news flows and the large event ahead, we