“As India moves towards the third largest economy, the retail investors should stick to their SIPs for a longer period above 5 to 7 years to build wealth,” says Girirajan Murugan, CEO, FundsIndia. In an interview with ETMarkets, Murugan said: “We expect the domestic markets to be volatile in 2024 and advise retail investors to focus on diversifying their portfolio across sectors and accumulate stocks in the mid to large-cap space which has strong fundamentals and avoid high-debt companies,” Edited excerpts:
As we step into 2024 - any key learnings which you would like to share?
Girirajan Murugan: Looking at the SIP book which has grown consistently in the calendar year 2023 and has reached an all-time high of Rs 17,000 crores in November shows the strength and depth of the Indian Equity market.
Regular and consistent SIPs will enable retail investors to benefit from economic growth and will act as the best strategy for accumulating wealth in the long term.
As India moves towards the third largest economy, the retail investors should stick to their SIPs for a longer period above 5 to 7 years to build wealth.
Investors should diversify their investments as it can reduce the overall risk of their portfolio and enhance their returns.
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The Indian M-cap hit $4 trn market back in November and has grown since then – we are now 5th biggest market in the world. What is fueling the rally and are we in the race to become top 3?
Girirajan Murugan: The rally in the Indian stock market is fuelled by key factors such as the robust domestic investment flows, which was also supported by strong inflow from FII's in November and December as the U.S. 10-year bond yield declined.
A decline in the crude oil prices is also supportive. The market believes that multiple rate cuts are in store for 2024 by the US FED and finally the market had a boost from RBI's hike in GDP growth estimates to 7% for FY24.
The aggregate earnings of India Inc., during the July to September quarter which have increased more than 30% also supported the sentiment.
India is expected to overtake Japan's nominal GDP in US dollars by 2027 and become the top three of the globe’s largest economies. The foreign broking firm CLSA also expects India's GDP growth to surpass Japan by 2027.
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How does the market look in 2024? Any big headwinds that investors should watch out for?
Girirajan Murugan: In 2023, the Indian Stock Markets achieved a significant milestone, with the Nifty surpassing the 21,000 mark in December and inching towards 22000 in January 2024, marking a notable development.
As we move forward into 2024, it is anticipated that the Indian Stock market will demonstrate resilience, potentially outshining its global counterparts.
This optimistic outlook is grounded in the improving global and domestic landscapes, coupled with favorable elements such as softened inflation, an early adjustment in monetary policy rates, and reduced crude oil prices.
The first half of 2024 may witness positive market dynamics, yet it's important to note that our perspective is not exclusively to any specific electoral events.
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Our bullish outlook for the year ahead is primarily underpinned by the ongoing investment cycle and the resurgence in manufacturing.
November and December were the months of IPOs for both mainboard and SME – how should retail investors decide which one to pick?
Girirajan Murugan: Mainboard IPOs are for large corporations with a post-issue paid-up capital of INR 10 crores and above and the SME IPOs are meant for small and medium-sized entities.
SME IPO investing is different from the mainboard IPO as SME IPO investing requires large sums of money over Rs. 1,00,000 which is quite high when compared to Rs. 14,000-15,000 for mainboard IPOs.
SME IPO has low liquidity post-listing and is only meant for investors with a high-risk appetite.
Retail investors should look at the company’s business model, future growth potential, promoter’s shareholding, historical performance, and objects of the offer and check the valuation of the stock through peer analysis before investing in an SME IPO.
Which sectors are looking attractive for the year 2024?
Girirajan Murugan: As the expectations are high on interest rate cuts globally in 2024 the outcome can lead to the inflows from the FIIs going ahead.
The sectors like manufacturing, IT, Banking, AMC, automobiles, insurance, and real estate are the major beneficiaries. The few other sectors likely to benefit are Defence, Railway Infra, and Digital Transformation.
We expect the domestic markets to be volatile in 2024 and advise retail investors to focus on diversifying their portfolio across sectors and accumulate stocks in the mid to large-cap space which has strong fundamentals and avoid high-debt companies.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
