Market in middle overs, investors should focus on discipline and strategy: Report
Investors should not increase equity portfolio allocation, and maintain 65 per cent allocation in large caps. As much as 35 per cent can be invested in mid- and small-caps, suggested Motilal Oswal Private Wealth in its report.
For investors currently under-allocated to equities, they could consider lump-sum investments in the hybrid category, and a staggered investment approach through SIPs or STPs would be more prudent for pure equity-oriented categories, the report added.
Due to limited room for further capital gains, softening of the yields should be used as an opportunity to gradually reduce the exposure in long-term bonds maturing in 10 to 15 years.
As the yield curve steepened due to RBI policy easing and liquidity interventions, investors may be "overweight on accrual strategies across the credit spectrum by allocating to private credit strategies, InvITs and select NCDs," the report said. Arbitrage funds and income-plus-arbitrage FoF are tax-efficient fixed-income alternatives, it said.
Silver can be considered a tactical play, though not as a substitute for gold, the report said. The MOPW report was neutral on gold.
India is a high-scoring pitch with excellent macro conditions and has all the ingredients for a long innings, the report said.
Resembling the initial PowerPlay overs in cricket, the March-April 2025 correction was a safe time to be aggressive. The current consolidation phase is like "middle overs" in a 50 overs match.
"In the middle overs, discipline and strategy win, not blind aggression. Hence, one should focus on building and avoid taking aggressive risks," the brokerage said.
Despite foreign institutional investor outflows and high valuation across market capitalisations and industries there are pockets of high-growth opportunities, along with the positive impact of a soft and stable dollar on foreign institutional investor flows, the report said.
India's services exports, production-linked incentives (PLI) pay-offs, free trade agreements (FTA) with other countries, and benign crude are expected to reduce the impact of tariff imposition. While the macroeconomic environment appeared stable, high-frequency indicators presented a mixed outlook from a near-term perspective.
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