Multicap funds with dynamic allocation flexibility among large and midcaps are expected deliver better returns over a period of time,`` notes brokerage house ICICI Sec.
Further providing its outlook on the equity markets, the brokerage house notes that the Indian markets have corrected around 14% from the peak in November 2010. At 18,000, the markets are trading at a P/E multiple of 15x FY12E earnings. This may be considered a reasonable level to start accumulating quality large caps and selective midcaps. The recent market correction has provided investors an opportunity to invest in equity mutual funds. From current levels, every dip should be utilised by investors to invest in equity markets rather than waiting to time for perfection.
Also, it notes that the appetite for equity investment from domestic institutional investors at lower levels seems strong as can be seen from their being net buyers in the recent correction. Higher commodity prices, particularly crude, are a major concern for the Indian economy and equity markets. India`s domestic economy continues to remain on a strong footing with visible growth prospects. The same is expected to drive the equity market over a longer period of time. Investors should avoid taking high cash calls as fund managers themselves manage the portfolio in accordance with market developments.
Source: http://www.myiris.com/newsCentre/storyShow.php?fileR=20110221155619198&dir=2011/02/21&secID=livenews
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