Mirae Asset Mutual Fund believes that the equity markets valuations have moderated following better earnings prospects over next few years.
The expected valuation of Nifty 50 index at 19.7 times in this fiscal and 17 times in FY26 is reasonable given the consensus earnings growth of 16 per cent CAGR over FY23-26, said the fund house.
The broad-based earnings growth provides better certainty.
Over the last 12 months, mid- and small-cap indices have outperformed the Nifty 50 by 30 per cent and 40 per cent, respectively, with some sectors particularly among industrials trading at a premium.
“Overall, we don’t see much deviation in current policy construct and expect earnings momentum to continue,” it said.
Investors should continue allocating through Systematic Investment Plans with preference to large-cap oriented and diversified funds such as large-, flexi- and multi-caps. Hybrid funds, given their flexibility in asset allocation could also be part of core portfolio. In thematic funds, investor may prefer consumption fund for expected mass consumption recovery and BFSI fund given the decent risk-reward, it said.