Mutual Fund Review - November, 2020 - ICICI Direct

Equity market outlook

- Given the sharp up move, particularly in last few months, we expect broader market participation to follow. Stock specific action is expected to continue wherein we continue to like IT, pharma, private banks and rural economy linked business models

- The broader markets represented by midcaps and small caps have started outperforming taking cues from the re-opening of the economy, better than expected recent quarterly results and positive investor sentiments. We expect midcap and small cap funds to outperform, going forward. Investors may consider investing lumpsum as well in midcap/small cap funds at current levels while continuing their overall systematic allocation in other categories as per their risk-return profile

- Our overall outlook on the market remain constructive with buy on dips as an investment strategy

Debt market outlook

- RBI has said that the scope for further rate cut remains and will be used judicially to have a higher impact. In a way, this indicates that the scope for significant rate cut remains low and focus would remain on ensuring surplus liquidity

- With banking system liquidity continuing to remain in surplus, short-term rates are likely to remain low for longer. The G-Sec supply overhang from both the central and the state government remains and is likely to keep the yield curve steep

- The yield for quality bond portfolios like corporate bond funds is trading at cyclical lows. Hence, the return expectation should be lowered. Selective funds in medium term category offering higher yield with measured exposure to sub-AAA rated papers are better placed for long term debt allocation

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MonthlyMFReport_Nov20.pdf

Source : Equity Bulls

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