Mutual funds: Amid market correction, experts upbeat about these sectors and themes

Benchmark indices have undergone a correction of nearly 10 per cent in the past couple of months, leaving investors jittery and anxious. When investors are unsure about the blue chips and mid-caps alike, there are some sectors and themes which are still investible.

The IT sector got an impetus soon after Donald Trump won with a thumping majority in the US Presidential elections. In November alone, the Nifty IT index has risen by 7 per cent so far. So, if you have some dry powder, you may consider investing in some value mutual funds, which select the stocks that are still available at the right valuation.

We spoke to a few experts to explore their views on the sectors and themes that are expected to grow in the near future. Most of the advisors we spoke to recommend investing in infra, niche pharma, IT, and financial services.

One wealth advisor recommended value funds, large caps and balanced advantage funds to long-term investors. Let us hear what they all have to say

Sectors still attractive

Jiral Mehta of FundsIndia recommends investing in banking and financial services, while Hemant Shah of Seven Islands PMS is hopeful of infrastructure and niche pharma. Anooshka Soham Bathwal of Dhanvesttor, meanwhile, says that investors can invest in the IT sector.

“We believe the banking and financial services sector is attractive and presents a good investment opportunity. This is mainly because of the following reasons: In the early stage of the next credit cycle - loan growth has just started to pick up (and will be driven by a recovery in real estate and corporate capex), the asset quality of banks has significantly improved, and the bank balance sheets are strong to support the upcoming loan growth cycle. Supported by long-term growth drivers such as - long runway for credit growth led by under penetration of financial services, technology democratizing credit, the shift of savings from physical to financial assets,” says Jiral Mehta, Senior Research Analyst, FundsIndia, Sector & Thematic Funds.

Those who are apprehensive about investing in sectors or themes can also consider long-term investments in value or large-cap funds.

“Long-term investors who are investing for over five years can consider the value and large-cap funds where valuations are closer to historical averages and offer a good risk-reward balance. For shorter time periods - Balanced advantage funds and hybrid funds would be suitable as they offer a debt cushion against market volatility, which is useful in the current scenario. Arbitrage funds remain the safest and most tax-efficient way to park money for the very short term,” says Mayank Misra, Vice President of Product, Mutual Funds, IND money.

"In the current market scenario, investors should focus on sectors deeply tied to India's growth story, particularly infrastructure and niche pharmaceuticals. The infrastructure sector stands out as a significant opportunity, given the government's robust push for development. Investors should look for companies with low-leverage balance sheets and strong growth visibility," says Hemant Shah, Fund Manager, Seven Islands PMS.

Meanwhile, Anooshka Soham Bathwal, CEO and Founder of Dhanvesttor says, “We believe the IT sector performed well in the last quarter and is likely to maintain its strong performance. Meanwhile, the Pharma sector's valuation appears quite reasonable, and with evolving consumption trends, the FMCG sector seems attractively priced too.”