Current valuations offer an excellent opportunity for staggered investments

DSP Investment Managers says that current valuations offer an excellent opportunity for staggered investments and is positive on sectors like Banking & Financial Services, Autos & Ancillaries, Healthcare and some construction materials companies, while maintaining a cautious outlook on IT and metals segments. 

The recommendations are from DSP Investment Managers ‘The Navigator’, an asset allocation tool which would recommend investors every quarter a strategy to deploy their investible surplus and allocate funds among asset classes.  

“The Navigator” studies and analyses market conditions, with a detailed take on drivers of returns, including valuations, growth, across asset classes.

According to The Navigator, auto is one of the few sectors with limited earnings downgrade risk and potential re-rating because the easing of steel prices bodes well for the margins at a time when demand is gradually recovering. 

The pharmaceutical space too offers opportunities because of lower valuations and the evolving healthcare landscape. Equity market valuations are not frothy and appear to be at a comfortable level after nearly 18 months. 

The current valuations offer an excellent opportunity for staggered investments. The NIFTY valuations are now at a sweet spot where they offer good potential returns.  

The valuation froth that emerged from post-Covid earnings revival and ultra-low interest rates is now reversing and making valuation-based investing a reasonable proposition.