General Elections 2024: Kotak Alternate Asset Managers suggests THIS strategy ahead of poll results amid volatility

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Read here: Elections 2024 & Stock Markets: ‘Stop predicting, start…’ says Deepak Shenoy "In our view, a large part of the optimism is already priced in, while disappointment is not. Therefore, the risk-reward is skewed slightly towards a buy-on-dip strategy, rather than going all in," it said. Overall, it continues to believe the Indian equity market will deliver low double-digit returns in the current financial year after the positive performance YTD.

In terms of the sectors, Kotak has cut its negative view on IT. It believes the sector valuation now correctly reflects the ongoing challenges and that near-term outperformance is possible. "The IT sector valuation has become more attractive.

However, a sustained rally is less likely as the sector dynamics remain challenging and the recovery in operating performance is still some time away," it said. Kotak continues to prefer pharma over IT. On the other hand, it stated that the recent commentary from the FMCG and two-wheeler companies has been positive with a view that the rural demand is picking up.

After significant consolidation and underperformance, it expects these sectors to remain in favor due to their defensive nature and attractive dividends. It further expects the metals and mining sector to continue to benefit from accelerating domestic growth, while Chinese macro data has begun to stabilise. Gold and silver look interesting even after the recent rally, given geopolitical risks.

Within financials, Kotak remains constructive; however, the outlook has been weakening mainly due to increased regulatory scrutiny. Hence, it recommends trimming positions, especially in some PSU banks. The sector is experiencing regulatory policy tightening, which may hurt valuations.