New Delhi: After a strong run up in 2014, markets are trading at fair valuations and expected to retain its positive outlook over the medium term, Tata Asset Management said in a statement on Monday.
"We continue to retain our positive outlook on the Indian equity markets over the medium term. After a strong run up in 2014, markets are trading at fair valuations. Valuations are likely to remain well supported," Tata Asset Management MD & CEO Arvind Sethi said in the statement.
As the pace of the economy improves over the next few quarters and inflation shows signs of cooling, corporate balance sheet and cash flows are likely to see improvement and thus, broader market will continue to look attractive in 2015, he said.
"We believe a bottom up approach to investing will set us up for decent returns. Among sectors, we continue to like and remain invested in auto and auto ancillaries, cement, consumer discretionary, capital goods and pharmaceuticals. We are equal weights on BFSI and infotech. We continue to remain underweight on metals, oil and gas, consumer staples and realty sector," he said.
Commenting on the outlook for debt in 2015, Sethi said, "We believe calendar year 2015 will be a year of transition albeit a slower one but a positive one for both the economy and the debt market. "We expect G-Sec yields to be volatile with a downward bias on the back of rate cut expectations and gradual fall in CPI. We expect the 10-year benchmark yield to trade around 7.50% levels by the second half of the calendar year 2015".
"On corporate debt side we have a negative bias towards lower rated bonds which are currently trading at compressed spreads. We are however, positive on AAA rated papers than lower rated ones," he said.