As we encountered the biggest turnaround time in past few months, amid changes took place in the investment arena, mutual funds also churning their allocation wisely & Prudently.
Looks like the time has come to shift focus beyond the largecaps and zero in on the broader market on Dalal Street. Or that is what the latest buy-sell data of SBI Mutual Fund – the country’s largest asset management firm – is indicating.
The 50-share Nifty gained 55 per cent to 11,642 till October 30 from its 52-week low of 7,511 hit on March 24. The index closed at 12,938 on Wednesday, November 18. The rally has taken Nifty’s price to earnings (P/E) ratio to 34.94 times as of November 17 from a 10-year average of 22.55 times.
In October, the fund house lowered its holding in at least 40 Nifty companies, as their valuations turned expensive amid the ongoing stocks rally from the March lows. In turn, they raised stakes in several midcap and small cap stocks from across sectors.
A fiscal booster is a must to kickstart the long overdue economic and earnings cycle in India. A decisive reflationary shift in global policy can be an added tailwind. Real estate, which has an important bearing on the economy owing to the high multiplier impact, is showing early signs of recovery, which is encouraging.
With growth becoming more broad based, this polarization should reverse. Looked through other lenses, this would mean a reversal in polarisation in value versus growth, smallcaps versus largecaps, cyclicals versus defensives, and more importantly emerging markets versus developed markets. For India, a global reflation could just be the icing on the cake.