
Time to start building wealth? Vaibhav Agrawal says correction in small and midcaps offers attractive entry points for investors
ETMarkets.com Volatility offers opportunity: Motilal Oswal AMC's Vaibhav Agrawal on market outlook, midcap picks, and gold.
In this edition of ETMarkets Smart Talk, we speak with Vaibhav Agrawal, CIO – Alternates (Public Equity) at Motilal Oswal Asset Management Company (MOAMC), who shares his insights on the current market landscape amid rising volatility and global uncertainties.Despite recent swings triggered by geopolitical tensions and macroeconomic headwinds, Agrawal believes this is a great opportunity for long-term investors to start building wealth. The sharp correction in small- and mid-cap stocks has opened up attractive entry points for investors with a strong risk appetite and long-term outlook.He also discusses asset allocation strategies for younger investors, sector outlooks, and how MOAMC is positioning its portfolio to capitalize on India's domestic growth story.Edited excerpts:
A) While macroeconomic and geopolitical developments are causing volatility, several indicators are working in India's favor. Inflation is under control, oil prices are at favorable levels, rate cuts are projected ahead, and the RBI is infusing liquidity. We're also seeing a revival in capex and fiscal support for consumption.
In fact, corporate earnings should improve in FY26. Despite global concerns, India's internal economic fundamentals remain solid. We remain constructive over a 6–12 month horizon. A) The current environment is favorable for equities. Sectors like capital goods, discretionary consumption, and technology are poised to benefit from economic recovery, infrastructure growth, and rising demand.
Young investors can afford higher equity exposure. In a low-rate environment, equities are attractive due to their superior long-term return potential compared to fixed-income assets.A) It's still early in the earnings season, but we believe asset quality concerns have peaked for banks and NBFCs. Credit growth and operating efficiency should drive better results going forward.IT companies, however, may face near-term headwinds due to slower global IT budgets and demand softness across geographies amid ongoing uncertainty.
A) Gold deserves some allocation in a portfolio. But comparisons with equities are point-to-point and must be contextualized.We're in a challenging phase for equities and a favorable one for gold, which skews perception. While gold is benefiting from global uncertainty and low rates, equities still offer higher long-term returns. Investors should balance gold's defensive traits with equities' growth potential.
A) The recent sharp correction has made valuations in quality mid- and small-cap stocks attractive. These stocks often outperform during recoveries as they are more sensitive to domestic demand and infrastructure activity. For long-term investors, this is a great time to accumulate quality names with strong fundamentals and earnings visibility.
A) We find compelling value in sectors like capital goods, electronics manufacturing, and BFSI. Government policies, infrastructure push, and demand for electronics are tailwinds for these industries. Capital goods will benefit from infrastructure momentum, and BFSI from credit growth and financial inclusion trends.
A) India remains a bright spot both in terms of growth and geopolitical positioning. But FII behavior is influenced by multiple global factors—interest rates, currency movements, macro trends—which makes it hard to predict. Despite India's strong fundamentals, FII flows are often governed by relative attractiveness of other markets and global liquidity conditions.
A) Yes, we've tilted our portfolio towards domestic-facing businesses with more predictable earnings and better visibility. By focusing on companies relatively insulated from global volatility, we aim to minimize external risks while still capturing growth from India's robust macro story. This approach allows us to stay defensive without compromising on return potential.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Economic Times
7 hours ago
- Economic Times
S&P 500, Nasdaq open near record levels after May inflation data
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price


Economic Times
8 hours ago
- Economic Times
Tanla Platforms Board to consider share buyback proposal on June 16
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
&w=3840&q=100)

Business Standard
10 hours ago
- Business Standard
Profit Booking, volatility, war fears: Mutual fund flows hit 13-month low,
Equity mutual fund schemes saw net inflows drop to Rs 19,013 crore in May 2025, the lowest in 13 months, down almost 22% from April's Rs 24,269 crore. At the same time, redemptions surged to Rs 37,591 crore, the highest since July 2024, as per data released by the Association of Mutual Funds in India (Amfi). So, what's going on, and more importantly — should you be worried? SIPs stay strong – That's good news While net inflows fell, investors like you continued to stay committed to long-term investing through SIPs (Systematic Investment Plans). In fact, SIP inflows hit a record high of ₹26,688 crore in May. That's a strong sign of resilience and discipline in retail investing, despite short-term noise. So, if you're investing through SIPs — you're doing the right thing by staying consistent. Why did net inflows drop? The sharp increase in redemptions from Rs 32,479 crore to Rs 37,591 crore indicates that many investors chose to capitalise on recent market gains by booking profits. "Equity net sales have seen a sharp downtick largely on account of higher redemptions. This was probably due to the war-like situation in the beginning of the month leading to sentiment being cautious," said Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC. Profit Booking: After a strong rally earlier in the year, many investors chose to cash out and lock in their gains, especially with the market feeling uncertain. War-Like Tensions: The launch of India's Operation Sindoor against Pakistan and global geopolitical tensions led to cautious sentiments. Valuation Concerns: Markets had run up a lot. High valuations made investors jittery and triggered redemptions, especially from large-cap funds. "The broader slowdown in equity inflows can be attributed to a mix of factors: a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations. Also, heightened global volatility—stemming from geopolitical tensions with India launching Operation Sindoor against Pakistan and concerns around global inflation, contributed to a risk-off sentiment among some investors," said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India. What were investors buying (and avoiding)? Flexicap Funds: Topped inflows with Rs 3,841 crore. These give fund managers the freedom to pick across large-, mid-, and small-cap stocks. Small- and Mid-Cap Funds: Still popular (Rs 3,214 crore and Rs 2,809 crore respectively) but inflows cooled, showing that investors are becoming cautious with these volatile segments. Large-Cap Funds: Received just Rs 1,250 crore — half of what they saw in April. The sharp decline suggests a tactical shift among investors toward higher-growth, though riskier, segments like mid and small caps. It also reflects some degree of profit booking, as large-cap indices had already seen considerable run-up in the months prior. Thematic & Sector Funds: Two new launches drew Rs 1,792 crore, with the total category inflow at Rs 2,052 crore. Clearly, many investors are betting on new themes and trends. "Small-cap category, despite its inherent volatility, continues to attract investor interest on the back of strong domestic sentiment and long-term return potential. However, the pace of inflows into small-cap and mid-cap funds saw some cooling compared to April, indicating a cautious undertone amid market valuations and global uncertainties. Also, investors need to be wary of inherent risks that tag along with small and mid-cap segments while making investment decisions. They should align their investments in these segments in line with their risk appetite and overall asset allocation and avoid going overboard in them, cautioned Srivastava. "Particularly encouraging is the 46% surge in hybrid fund inflows to Rs 20,765 crore, demonstrating sophisticated investor appetite for balanced investment strategies. The launch of 19 new open-ended mutual fund NFOs raising Rs 4,170 crore signals continued innovation and product development in the market. This temporary consolidation phase actually presents an excellent opportunity for long-term investors to enter India's dynamic equity markets at attractive valuations, supported by the country's strong economic fundamentals and growth prospects," said Saurabh Jain, Equity Head, Research- Fundamentals, SMC Global Securities. Key takeways for investors: With markets recovering from earlier volatility, many investors used the bounce-back to book gains. Redemptions spiked 16% to Rs 37,591 crore, the highest since July 2024. After a sharp rally, markets seemed overvalued to many. Experts say May's less buoyant equity performance led to a 'wait-and-watch' approach. Another important trend? A shift from pure equity funds to hybrid funds. Amid market volatility, hybrid schemes (like balanced or aggressive hybrid funds) recorded a 46% month-on-month jump in inflows. That means investors are looking for a bit more safety without abandoning equities altogether. "Investors seem to be cautious on equity generally as a category with lower fund flow over the par 6 months. Inflows have nearly halved from the peak. Thematic and smallcap continues to draw funds displaying a robust risk appetite of investors," said Juzer Gabajiwala, Director, Ventura. The slowdown in flows was also driven by a shift in investor preference from pure equity funds to hybrid schemes amid market uncertainty and volatility, with hybrid funds recording a 46% month-on-month surge in inflows." Despite the net outflow trend in equity schemes, the mutual fund industry crossed ₹70 trillion in AUM, thanks to SIPs and market recovery. It's a strong sign of India's maturing investor base and consistent retail participation. What should you do as an investor? Stick to SIPs: Record inflows mean disciplined investors are winning. Keep going. Rebalance if needed: If your portfolio is too small-cap heavy, consider rebalancing. Consider Hybrid Funds: If you're uneasy about full equity exposure, hybrid funds could offer a middle path. Avoid knee-jerk reactions: Don't let temporary market headlines derail your long-term goals. "Large-cap allocations have cooled sharply as Investors are recalibrating their risk-reward expectations. The relatively modest decline in small and mid-cap inflows suggests that the appetite for growth stories remains intact, though tempered by valuation consciousness. The pause should help earnings catch up with prices and create healthier entry points. Debt-fund outflows of about ₹16,000 crore look tactical—likely driven by treasury cash-management around quarter-end and an RBI policy overhang—rather than a structural shift away from fixed income. What's most encouraging is the record AUM crossing Rs 72 lakh crore, a fresh peak that underlines the long-term migration of household savings into markets. For investors, the takeaway is clear: stick to systematic plans, rebalance rather than chase performance, and let market volatility work for you instead of against you," said Anoop Vijaykumar, Head of equity, Capitalmind.