The Indian equity markets are likely to rise between 15 and 20 per cent over the next year according to a majority of fund managers polled by ICICI Securities. Of the fund managers surveyed by the brokerage, 50 per cent said equity markets are undervalued, and the remaining 50 per cent said the markets are fairly valued. The previous survey was done in August 2012.
Here are the top five findings of the quarterly survey
- Market strategy: A majority of fund managers have advised investors to increase allocation towards the equity market on the back of expectations of an improved investment climate because of recent government reform action and expectations of a rate cut by the Reserve Bank of India.
- Major global risks: High crude prices, sharp volatility in the rupee and the European sovereign crisis remain a worry for the markets.
- Earnings expectations: 75 per cent of respondents expect earnings growth to be in the range of 10-15 per cent in FY14 as compared to 5-10 per cent in FY13.
- Market cap preference: 58 per cent respondents prefer to invest in large cap stocks as compared to midcap stocks.
- Sectoral preference: Banking, FMCG and pharma sectors are the favored sectors. The preference towards the banking sector, especially private banks, has increased as compared to the previous survey. FMCG/consumer staples and media sector also gained in preference. The preference for pharma and IT sectors has reduced as compared to the previous survey.