Gaurav Mehta of SBI MF, Nimesh Chandan of Canara Robeco MF, Prasanna Pathak of Taurus MF and Satish Ramanathan of JM financial MF share their views on the equity market.

1. DOMESTIC EQUITY MARKET OVERVIEW AND
WHAT TO EXPECT IN MAY 2021
Gaurav Mehta of SBI MF, Nimesh Chandan of Canara Robeco MF, Prasanna Pathak of Taurus MF and Satish Ramanathan of JM financial
MF share their views on the equity market.
AMFI Registered Mutual Fund Distributor

2. DOMESTIC EQUITY MARKET - PERFORMANCE SNAPSHOT FOR APRIL 2021
Driven by a grim
increase in coronavirus
cases and concerns
around the impact of the
current wave on India’s
nascent economic
recovery, equity markets
remained volatile in
April 2021.
Large cap stocks were
the worst performers for
the month of April 2021,
but the broader indices
were lifted by small and
mid-sized stocks: the
Nifty SmallCap and
Nifty MidCap gained
~5% and ~2%,
respectively.
1 Month Change % 1 Year Change % 3 Years Change% 5 Years Change% 10 Years Change%
Nifty 50Index -0.40% 48.40% 10.86% 13.26% 9.79%
Nifty Next 50 Index 1.71% 44.22% 4.24% 12.46% 11.82%
Nifty Midcap 100 Index 2.12% 79.20% 6.04% 12.89% 11.43%
NSE Smallcap 100 Index 5.57% 110.03% 0.69% 10.49% 8.34%
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
Nifty 50 Index Nifty Next 50 Index Nifty Midcap 100 Index NSE Smallcap 100 Index
Source : www.investing.com; internal calculation

3. OUT-PERFORMERS & UNDER-PERFORMERS OF APRIL 2021
Metals & Pharma were, respectively, the leading sectors last month, with the former advancing 22%, whilst the latter soared
10%. IT Services, Services, Energy, Financial Services, Bank and Auto sector remained flat with a decline of upto 2%. Realty,
PSU Banks & FMCG sectors lagged, with decline of 7%, 6% & 4% respectively in April.
Source : www.investing.com; internal calculation
22%
10%
0%
-1% -1% -1% -1% -1% -2%
-2%
-4%
-6%
-7%
-10%
-5%
0%
5%
10%
15%
20%
25%
Metals Pharma Media IT Services Services Energy Financials
Services
Private Banks Bank Auto FMCG PSU Banks Realty
Performance in April 2021

4. REVIEW OF VALUATIONS BASIS TRAILING PE & PB RATIOS
Looking at the PE ratio and PB ratio changes in last one year, the data seems not to be giving clear indication in favour of any
segment, though valuation gain can be seen in all the segments from their one year ago valuations. Elevated valuations makes
the markets vulnerable to any sharp shifts in global liquidity, inflation expectations & covid-19 resurgence.
Source : www.nse.com; internal calculation

5. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Gaurav Mehta | Equity Fund Manager, SBI MF
 Despite the 2nd wave of Covid, damage to the longer term economic and earnings recovery may be limited. In fact,
this should provide good entry opportunity for long term investors
 In the near term, the progress on the 2nd wave, associated economic restrictions and the pace of vaccination
remain the key monitorables
 Corporate commentary will be keenly watched out amid second wave uncertainties, more so for the banking sector
 Banks have significantly underperformed in recent correction. Their performance in the second round of Covid -
related stress will be key not just for the market but also for the pace of economic recovery
 Mid and small caps still have room to outperform their larger peers
Commentary on Sectors
 We may be at the beginning of a new economic and earnings growth cycle. We therefore prefer using this correction to buy pro-
economy assets and sectors
What to recommend
 For investors with lower risk appetite and/or shorter investment horizons, recommend large cap funds
 Investors, who have a greater risk-appetite and/or longer investment horizons should consider mid and small cap funds.

6. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Nimesh Chandan | Head – Investments Equities, Canara Robeco MF
 After a strong rally in the market, markets were bound to take a breather. However, fundamentals remain strong
and economic recovery continues
 News on health infrastructure not able to handle cases in some areas is creating fear
 However, the pace of vaccinating the vulnerable segments of the society is continuing at good pace. Experts
studying the virus expect cases to peak in May and then start declining. This should be a good trigger for the
market
 Current lockdowns are likely to be selective in terms of places (rather than national lockdowns); less stringent than last year, and also
of a shorter time compared to last year
 Have seen earnings growth recover and hence the market valuations are still in the reasonable zone
Commentary on Sectors
 Positive on sectors like Financials, industrials materials and consumer discretionary. In terms of themes, we see good tailwinds in rural
growth, manufacturing and housing
What to recommend
 Since we are seeing a broad recovery in earnings and cyclical upturn, we are recommending some exposure to midcap and small cap
companies. This can be achieved through multi cap, midcap or small cap funds depending on the individual risk profile

7. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Prasanna Pathak | Head of Equity & Fund Manager, Taurus MF
 Market will remain range bound in near term
 Current earnings season and management commentary, covid cases and extent of lockdowns, vaccination
drive and its implementation, global liquidity, dollar index, commodity prices and inflation are monitored
currently
 Valuations across market-cap are expensive
 However, assuming a strong recovery in second half of FY22 and FY23, valuations of midcap/ small caps and
in certain domestic economy-facing companies may offer some opportunities
 To investors worrying about another correction, covid is more of a known event and most probably a temporary event and hence there
is lower probability of big correction like in March 2020
Commentary on Sectors
 Positive on sectors which may benefit from domestic economic recovery like corporate banks, cement, capital goods and metals
 Also, chemicals, manufacturing (Make in India) and pharma are other themes which looks interesting
What to recommend
 Recommend midcap and small cap funds as they are expected to do better in the next 2 - 3 years

8. WHAT TO EXPECT IN MAY 2021 – VIEWS FROM FUND MANAGERS
Source : www.cafemutual.com
Satish Ramanathan | MD and CIO - Equity, JM Financial AMC
 The near term outlook of equity markets is dependent on two key factors – Covid – 19 control and extent of
slowdown due to lockdowns
 Although earnings and markets appear resilient, we can see western countries moving ahead due to significant
investment in vaccinations. Hence incremental money may move to these markets rather than emerging markets
 Markets are currently positive anticipating a quick recovery with limited impact on the economy due to partial
lockdowns
 The main trigger for the market is sustained earnings growth
 The real test for the market will come through during 2nd half of FY22, when impact of lockdowns plays out
 Volatility may rise on account of fears of inflation and its impact on valuations
 Large cap companies in general move with global flows and are at premium valuations
 Midcap valuations have moved up but are still reasonable compared to historical trends
Commentary on Sectors
 Positive on IT, pharma and consumer. Also, allocation to metals and industrials is recommended as these sectors can benefit from the
Atmanirbhar initiative
What to recommend
 Recommend a good blend of select large cap and midcap funds as also some sectoral and off shore funds for medium term

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