Even as the equity markets have given stellar returns since January, and the calendar year nears its end, top fund manager S Krishna Kumar of Sundaram Mutual Fund says that overall valuations appear to be a bit stretched.
Even as the equity markets have given stellar returns since January, and the calendar year nears its end, top fund manager S Krishna Kumar of Sundaram Mutual Fund says that overall valuations appear to be a bit stretched, and there are a few pockets of excessive valuations. In an interview to ET Now, S Krishna Kumar, Head Equity – Equity, Sundaram Mutual Fund said, “Overall valuations are 16-17 times FY19 across the broad market but there are pockets of excessive valuations. The strategy would be to probably play as a valuation philosophy that will come back into focus more across the investing community.”
Sharing his top bets currently, Krishna Kumar said, “We believe internally, the insurance sector has lots of tailwinds, the order books have been swelling, the momentum in terms of revenues are picking up, profitability is improving, balance sheets are getting restored and so infra, EPC, construction and associated sectors like short cycle missionary, cement, etc. would be sectors that would be fairly comfortable with the corporate banks which are getting some attention from the government and the RBI as capital comes in over the next 24 months. Corporate banks including the top level PSU banks would be a lot more attractive.”
In the same address he advised investors to go in for multi-cap funds, rather than focussing only on small-caps or large-caps. “A balanced approach works in investing. An investor should ideally allocate about 60-70% of his corpus in the large-caps and about 30-40% into mid-caps. It should be a good multi-cap approach to investing. There will be periods when large caps will perform but mid-caps will also do well. It is good for the entire market,” S Krishna Kumar told ET Now. Further, the market expert said that mid-caps will continue to do well. “Definitely, you would find and advise investors to continue to be positive on the mid-cap story and if I had to choose one fund, I would like to get into a mid-cap fund with a three-year SIP,” he told the channel.
Krishna Kumar said that the fund house is currently cautious of the pharma sector. “Many of the companies are probably not worth what they were a year back. There is lot of headwinds that the developed markets pose for Indian generic companies and that is why we continue to remain a little cautious on the space and will see if in the next six months things start to look better,” he said.