Ambit increases investment in FMCG and healthcare sectors

Ambit has shifted its investment strategy to focus more on defensive sectors, particularly fast-moving consumer goods (FMCG) and healthcare. This change comes as macroeconomic uncertainties, such as interest rate movements and global trade tensions, continue to impact market conditions. In a recent conversation, Nitin Bhasin and Bharat Arora from Ambit discussed the current market landscape. They noted that large-cap stocks are expected to perform better than mid- and small-cap stocks in the coming years. Since September 2024, mid-cap and small-cap stocks have struggled more than large-cap stocks, which they believe will continue for the next 18 to 24 months. The market has seen a decline in retail investor activity. Recent data shows that the inflow of money into mutual funds has decreased for the second month in a row. The experts suggest that if market returns continue to decline, this could further pressure equity investments. Currently, small-cap and mid-cap stocks are considered expensive. They are trading at higher premiums against their historical averages, while large-cap stocks appear fairly valued overall. The advisors are encouraging investors to focus on high-quality, low-volatility stocks, particularly in the banking and financial sector. Global interest rates and economic conditions are also influencing investments. In India, inflation is expected to remain low, and interest rates are likely to decrease. This could have a mixed impact on domestic yields and equity markets, as high rates and uncertainty can affect investor confidence. Regarding trade tensions, the U.S. tariffs on Indian imports may reduce India's price competitiveness in the U.S. market, although the experts believe that the overall impact on different sectors might be limited. To minimize market volatility, Ambit is increasing its focus on large-cap and heavyweight stocks. They believe sectors like FMCG and healthcare will perform well in a slowing growth environment. For new investors, they recommend considering balanced funds that mix equity and debt, as these can provide more stable returns during uncertain market conditions. Overall, they hold a cautious outlook for equities and suggest a stronger allocation towards bonds.