Quant MF expects market correction to pave the way for risk-on phase

The recent downturn in the equity market may see a reversal once the US elections are over, according to Quant Mutual Fund, which emphasises that the last month’s correction should be seen as an opportunity to build more resilient and rewarding portfolios.

 

In October, the equity market witnessed a sharp fall amid record selling of close to Rs 1 trillion by foreign portfolio investors (FPIs). The Nifty 50 ended the month with 6.2 per cent fall, the biggest monthly decline in the last four-and-a-half years. On Monday, the index corrected another 1.3 per cent.

 

“Correction will most likely be followed by a risk-on phase from November onwards," the fund house said in a communication to investors, citing the recent rise in Bitcoin as a lead indicator. In the risk-on approach, investors are open to taking higher risks.

 

In the near term, the market may continue to see higher volatility, it said.

 

"Rising impact cost due to recent regulatory changes and foreign investors rotating money to China will add further pressure on market sentiment. Expect cross assets, cross market volatility to spike; there will also be noisy political narratives due to the US elections," the fund house stated.

 

The medium to long-term view remains constructive, according to the fund house

 

 "The India growth story is substantiated by data that compellingly indicate India's potential to emerge as a leading global investment destination and manufacturing economy in the near future. We have consistently reiterated our belief that the period until 2047 will be pivotal for India," it said.

 

"However, it is essential to moderate our expectations to reasonable levels moving forward," it added.