Navigating Market Volatility: Harsha Upadhyaya's Insights on Return Expectations and Investment Strategies

Harsha Upadhyaya, CIO-Equity at Kotak AMC, provides insights on the current market conditions and expectations for the coming year:

Harsha Upadhyay - Kotak Mutual Fund

Market Outlook

• Valuation expensiveness, especially in the broader market segments

• Slowing earnings growth, with June quarter showing muted year-on-year growth for the first time since the COVID disruption

• Strong performance of Indian equities over the past 12-24 months, leading to expectations of a cool-off period

Insights on Return Expectations and Investment Strategies

Following are his Insights on Return Expectations and Investment Strategies

Return Expectations

• Expect more volatility compared to the past couple of years

• Returns are likely to be lower than recent periods due to elevated valuations and slowing earnings growth

Investment Strategy

• Move towards lower-risk sectors with more earning stability and comfortable valuations

• Focus on defensive positions rather than aggressive ones

• Shift from mid and small-caps to large-caps where there is relative valuation comfort

Sectors to Watch

• Banking

• IT

• Telecom

• Consumption (particularly the rural segment, which is expected to improve over the next couple of quarters)

MNC Fund Launch

• Companies promoted by foreign entities with over 51% shareholding

• Joint ventures with foreign companies holding at least 26%

• Indian-owned companies with more than 50% revenue from abroad or significant overseas manufacturing assets

This fund aims to provide stability and secular growth in the current market environment characterized by elevated valuations.