Indian market's short-term outlook clouded by valuation risks: Niraj Kumar of Future Generali Insurance

livemint.com:

In an interview with Mint, Niraj Kumar, Chief Investment Officer of Future Generali India Life Insurance Company said while India remains an attractive investment destination for long-term investors given its strong macro fundamentals, the current valuations offer a limited margin of safety. Kumar also talked about the sectors that look attractive at this juncture and how General Elections 2024 will influence the market. The global economy has been witnessing conflicting signals in terms of economic activity and growth.

While the US and India have been holding firmly, the European economy along with China has slowed down materially. In the future, as the lagged impact of the global synchronous tightening plays out, we believe that global growth will decelerate even further.

As the growth slows down, inflation will give way to growth as the primary concern for the policymakers and hence we believe that we are very close to the peaking of the interest rates globally and the cycle should start to reverse over the next few quarters. Against this backdrop, post the strong run-up in equity markets since April, we find equity markets fairly priced.

The run-up has been especially sharp in the broader markets where SIP money continues to come unabated and hence that segment of the market has indeed turned expensive. While structurally we remain constructive on the markets owing to the multitude of factors like macroeconomic stability, visibility of 7 per cent+ growth for an elongated period, cleaned up corporate and banking system balance sheets, favourable demographic, etc., we will continue to tread with caution in the near term would be selective and nimble in our investment strategy.