Fund managers who manage a large corpus of retail and corporate money are taking a cautious view of the Indian market, which has been one of the worst performers in the current calendar year. Most fund managers believe the Indian indices will trade in a range of around 10 per cent from the current levels till the end of this year.
According to the ICICI Securities Fund Managers Survey released on Tuesday, the overall view of the fund managers on the markets — both equity and debt — is cautious. “Most of the fund managers believe the equity markets are fairly valued. However, given the concerns over higher crude oil prices, the short-term view for the equity markets is neutral to bearish,” says the survey.
On the valuation front, most of the fund managers believe the Indian equity markets are fairly valued and not expensive nor very cheap, given the current macroeconomic environment. A majority of the participants advise investors to maintain the current asset allocation rather than increasing allocation to equity markets at the current levels.
The survey says more than 60 per cent of the respondents believe the markets will be in the range of 10 per cent from the current levels till the end of calendar year 2011.
Moreover, 38 per cent respondents are more optimistic and believe the equity markets may deliver returns in the range of 10-20 per cent till the end of calendar year 2011. In the current calendar year, the benchmark 30-share Sensex of the Bombay Stock Exchange (BSE) has already lost nearly 13 per cent or 2,500 points and is barely managing to stay above the psychological 18,000 mark. In 2010, the Sensex had gained a little over 3,000 points or 17.43 per cent.
According to the survey, which covered fund managers from 16 major asset management companies, almost all the participants believe a major global risk to the Indian markets remains high crude oil prices. While a majority of the fund managers believe many midcap stocks have the potential to outperform, with a one-year investment horizon, they have suggested ultra short-term and short-term debt funds as the preferred debt fund options for investors. Pharma and information technology are the participants’ preferred sectors.
