Indian indices have defied COVID-19 odds hitting multiple record highs in the recent sessions, ignoring the economic impact of the severe second wave of the pandemic. The investor sentiment also benefited from the upward movement of global peers buoyed by the recovery in the US economy.
Back home, mid-cap and small-cap indices outperformed frontline indexes led by very strong interest among retail investors in the broader markets.
Sharing its market strategy in a recent note, IIFL Securities has advised stock investors to pick select companies with strong fundamentals and a stable growth outlook.
“As the current valuations are quite expensive, a risk-based asset allocation strategy can mitigate the risk that may arise due to the disconnect between pandemic’s impact and market movements,” it said in the note.
For investors with a low-risk appetite, the domestic brokerge advised them to continue to invest in equities through the mutual fund route via SIP. It also suggested that schemes from Flexi Cap, Balanced Advantage and Value category remain relevant in the current market scenario.
IIFL also noted that the earnings upgrades due to better than expected Q4FY21 results coupled with a notable rise in the frontline index have pushed the forward multiple above its long-term rolling average recently.
As states begin to ease localised lockdowns after continuous decline in active cases, investors are enthused believing that relaxing of lockdowns would revive the economic activities, it noted.
For debt investors, it suggests continuing to stick to shorter-duration debt instruments. Schemes from Low Duration, Short Duration and Corporate Bond categories are suitable to wade through the upcoming interest rate environment, it added.
It has come out with 3 different portfolio types for varied types of investors—aggressive, moderate, and conservative.
It notes that an aggressive portfolio targets above-market return using high beta and midcap ideas, while a moderate portfolio uses a Multi-cap approach to reduce volatility, and a conservative portfolio is built with objectives of less volatility and capital protection.