Equites, fixed income, and Gold: Axis recommends diverse multi-asset portfolios for optimal risk management.
Equities: The brokerage anticipates that market dynamics in the near term will pivot around prevailing narratives. Key drivers include the sentiment surrounding policy continuity, anticipation ahead of the Budget, the progress of the monsoon, advancements in the CAPEX agenda, fiscal consolidation efforts, and expectations for rural economic recovery in the latter half of the year.
These factors are poised to shape investor sentiment and market direction, influencing investment decisions and market outcomes in the coming months.In view of recent developments, the brokerage foresees that style and sector rotation will be pivotal for generating alpha in the foreseeable future. Despite the robust performance of Midcaps and Smallcaps in recent months, the brokerage believes that the margin of safety, particularly in terms of valuations at current levels, has diminished compared to Largecaps.
As a result, certain segments of the broader market may experience a period of consolidation in the near term, with flows potentially shifting toward Largecaps.Based on this, Axis sees Nifty 50 at a new high in the near term. In our base case, we roll over the Nifty target to Mar’25 to 24,600 by valuing it at 20x on Mar’26 earnings.
Hence, it recommends investors remain invested in the market and maintain good liquidity (10 percent) to use any dips in a phased manner and build a position in high-quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months.Fixed income: In its June 2024 MPC meeting, the RBI opted for a status quo by maintaining the policy rate at 6.5%. The central bank reiterated its stance on gradually withdrawing accommodation while balancing growth and inflation dynamics.
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