Retail investors should continue investing in equity funds through the systematic investment plan (SIP) route and maintain exposure to companies of all sizes, believes A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life Asset Management Company (ABSLAMC). The firm recently came out an outlook for the Indian market in 2023. In an interview with Abhishek Kumar, he picks the sectors that could perform in the year. Edited excerpts:
Which sectors do you see performing in 2023?
The market is going through a consolidation phase as it always happens when the valuations reach a certain level and other asset classes turn relatively attractive. Having said that, we still see opportunities in certain sectors. For example, the information technology (IT) companies may see a reversal in fortunes after underperforming in the last one-and-half years. A lot will depend on the trend in global IT spending.
Banking and financial sector has been doing well and can continue to outperform as the credit offtake has been good and their balance sheets are well capitalised to capture the next round of growth. The future growth potential, along with the low non-performing assets (NPAs), paint a rosy picture for the sector.
Third is capital goods. High amounts of investments are likely to flow into this sector, from both — the government (through railways and defence) and the private players.
Which bets did well for ABSL MF in 2022?
First, it was banking and financial services where we were overweight. Second, it was the capital goods sector.
Your advice to investors for 2023 in terms of asset allocation?
Given that India is likely to see broader economic growth going forward, equity should be the preferred asset class. Investors should continue to invest through systematic investment plans (SIPs) and maintain exposure across market capitalisation — from large-caps to small-caps. Also, a fair bit should be allocated towards fixed income. The yields have risen to good levels after the rate hikes and investors can make good returns through debt.
Yields have been at good levels for some months now but still inflows aren’t coming in. What could be the reasons?
Money has started to flow in but yes the amount is low. High net-worth individuals, who have been predominantly focused on equities have already started looking at the fixed income space. Small and medium enterprises are also moving towards debt. We expect the inflow to rise with the rate hike cycle nearing its end.