Sunil Subramaniam, MD & CEO of Sundaram Mutual Fund, is bullish on the economic recovery, but not on the market. Subramaniam believes the market may not necessarily follow the path of a very sound economic recovery.
"Markets will continue to be volatile for the next couple of months because of the flows being volatile,” said Subramaniam in an interview with CNBC-TV18. According to him, the market will remain volatile till mid-Jan after which it will respond to the recovery in economic indicators.
“While there will be volatility, we expect the downside to be protected by mutual fund-buying and hence I would say that give me time till mid-January for the market volatility to settle down after which I feel the markets will respond to the fundamentals of the improving economy and should see the next leg up," he said.
While giving recommendations for portfolio positioning, Subramaniam said, “Today we should maintain a 70 percent bias towards largecap and 30 towards mid and smallcap and come January first quarter, I would reduce largecap from 70 down to 60 percent or even 55 percent and gradually build up mid and small cap.”
“IT, pharma, and to some extent consumption -- the FMCG level -- should form the core of the portfolio for the next 2 months and then you can add banking which I see is a good growth sector over the next 12-18 months. Gradually add discretionary consumption like consumer durables, autos and housing - all of those I think would come in to play in a greater level from mid-January onwards," he added.