Indian equity investors are experiencing 12 to 18 months of zero returns in dollar terms and a painful correction in small and midcap stocks, according to The Economic Times. Sandeep Neema, CIO and Director of Equities at PL Asset Management, advises investors to distinguish between weak sentiment and improving fundamentals. As reported by ET Now, Neema emphasizes that 'The fundamentals are quietly improving' and many companies have delivered above-expected results in Q4. He suggests investors should view the current backdrop as an opportunity to invest for the next 12 to 24 months.
Despite market underperformance, Neema maintains that if your equity allocation has drifted lower over the past year, now is the moment to top it up. According to The Economic Times, he considers Indian equities the most attractively placed asset class within any diversified portfolio today. His recommendation comes as investors have been frustrated by stagnant returns and market corrections, creating what he describes as a 'sentiment is broken, fundamentals are not' scenario. Short-term volatility across gold, US bonds, and global equities should not push investors into reckless pivots, with long-term goals anchoring every decision.
Neema identifies four sectors worth owning right now based on strong earnings visibility and attractive valuations. As reported by The Economic Times, he highlights financials as the sector with the biggest turnaround potential. After two grinding years of headwinds, sluggish credit growth, RBI rate pressures, and asset quality stress across banks and NBFCs, Neema believes the sector has turned a corner with credit growth returning to 13-15% and rate cut cycles appearing to conclude. The metals sector offers structural opportunities with virtually no meaningful global capacity addition in over a decade, while aluminium is up roughly 30% and copper around 40% over the past year. The power and energy sector provides 3-4 years of earnings visibility through transmission, generation companies, and solar players, while pharma correction appears complete with recovery ahead after two to three years of earnings and valuation pain.
While maintaining a cautious stance on IT sector, Neema advises investors to top up equity allocations for long-term gains. According to The Economic Times, he emphasizes that 'stick to your allocation, but beef up equities' as the current market conditions present opportunities. His analysis suggests that despite weak sentiment, the underlying corporate fundamentals in India remain positive, making this an appropriate time for strategic portfolio rebalancing. For investors with higher risk appetite, turnaround stories in mid-sized NBFCs and smaller banks offer maximum earnings delta, while conservative investors can find cleaner entry in large private sector banks and select PSU banks.
