By Nandini Sanyal
Copyright indiatimes
ETMarkets.com
Indian markets may be going through a correction phase, but valuations remain stretched, making fresh investments tricky, according to Raunak Onkar, Research Head & Fund Manager at PPFAS Mutual Fund. Speaking to ET Now, Onkar said the fund house is taking a “wait-and-watch” approach, deploying money selectively in areas like private sector banks, auto stocks, and international equities while holding higher cash levels for now.“Despite the correction, the market hasn’t meaningfully corrected to justify the tepid growth we see in certain sectors. So, we prefer to wait until better opportunities come towards us,” he said.US rally driven by tech giants, not broad-basedOnkar also highlighted the concentration risk in U.S. markets, where the S&P 500 and Nasdaq have hit record highs largely because of the “Magnificent Seven” mega-cap technology stocks.“These are not just tech companies—they represent long-term trends like digital advertising, cloud services, e-commerce, and semiconductor innovation,” he explained. “The index reflects cash flow and earnings growth as much as stock prices. But one must be cautious about valuations.”Live EventsYou Might Also Like:India’s growth story Intact: JPMorgan’s Sanjay Mookim sees valuation edge, consumption boostWhile Indian companies are still mainly users rather than creators of cutting-edge tech, Onkar pointed out that India’s strong talent base in chip design and engineering could eventually help the country play a bigger role in the global tech supply chain.Auto & EV outlook: Long-term story intactThe GST reset and EV adoption trends were also in focus. Onkar said PPFAS has not added new auto holdings recently but continues to hold significant stakes in Mahindra & Mahindra and Maruti Suzuki.“EV adoption should not be judged by quarterly news flow. We have moved from almost zero indigenous technology three years ago to meaningful manufacturing today. The EV ecosystem—both two- and four-wheelers—is steadily building up, supported by power grid expansion and infrastructure upgrades,” he said.Onkar added that EVs will continue to grow in relevance despite pricing resets, and that ICE leaders transitioning to EVs will be crucial beneficiaries.You Might Also Like:HSBC upgrades India to ‘overweight’, sees Sensex rallying till 94,000 by 2026-endDebt and hybrid funds gaining appealWith equity valuations elevated, debt has become an attractive option, according to Onkar. PPFAS has parked some cash in short-term debt instruments such as CDs and CPs.“Investors should reallocate between equity and debt through hybrid funds to rebalance portfolios. It’s a great time to add debt exposure after the one-way equity move of recent years,” he noted.Consumer stocks still too expensive, except ITCOnkar said the consumer goods space remains overvalued despite GST cuts and policy support. The only exception in the PPFAS portfolio is ITC, which was accumulated during the COVID-19 crash.“ITC still trades at reasonable valuations, has solid cash flows, and a stable dividend policy. Other consumer plays remain too expensive for our comfort,” he explained.You Might Also Like:India equities well-positioned, but returns to moderate; Nifty target at 26,500: Sanjay MookimDefence & manufacturing: Right direction, but needs patienceOnkar urged investors not to conflate stock rallies with business fundamentals in sectors like defence, railways, and shipbuilding.“These sectors are moving in the right direction, but expectations may be ahead of actual delivery. Over time, indigenous technology and strong order books will translate into cash flows. But patience is required,” he said.Go for a selective, patient approachSumming up, Onkar reiterated that PPFAS will stay cautious until valuations become more attractive. “Markets are expensive, even after the recent correction. We prefer to hold cash and wait for opportunities while selectively adding quality businesses at reasonable valuations,” he said.Add as a Reliable and Trusted News Source Add Now!
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