Focus on asset allocation in second half of 2022; inflation data to drive markets: Kunal Valia

“We adopt a disciplined approach while creating portfolios. As part of discipline, asset allocation is the starting point of any wealth creation journey,” says Kunal Valia, Chief Investment Officer – Listed Investments, Waterfield Advisors.

In an interview with ETMarkets, Valia said: “While deploying, a staggered approach over time enables to ride the volatility and provide better risk-adjusted returns,” Edited excerpts:

Indian market touched a fresh 52-week low in line with US markets post US Fed rate decision. Time to turn cautious or buy the fear?
Market corrections offer an opportunity for long-term investors to create wealth.

The current correction has been broad-based and across large, mid, and small-cap companies and wide dislocations can be seen in sectors and companies.


Investors can use a combination of stocks, indexes, and active managers to take exposure to equities

We will be completing the 6-months of 2022 and it has been a volatile journey for investors. What is your outlook for markets for the rest of the year? Will we hit 14K first and then rebound?
Indian equity markets have corrected; however, the market has been relatively more resilient relative to equity markets in the US or in China.

Markets are likely to be data-dependent, as high inflation continues to dent the sentiment across consumers and businesses.

Global central banks are under pressure to control inflation anyhow and this is leading to larger and faster rate hikes.

Over time, the rate hikes coupled with quantitative tightening may have an impact on inflation.

Any positive news flows Russia-Ukraine situation and cooling off commodities particularly Oil can contribute towards positive sentiment and flows to equities globally.

Sectorally, Realty and IT sectors fell by more than 20% so far in 2022 – what is weighing on these sectors, and will the weakness continue? Any top stocks which are worth buying?
The domestic IT sector had seen a strong run in 2020 and 2021 and some reversal was likely given the valuation. Further, domestic IT sector witnessed margin contraction and high attrition.

The selling was accentuated by the large drawdown in Nasdaq – tech-heavy index. The sector after almost 30% in CYTD may find some plateauing and offers a strong opportunity to investors.

Rapidly rising interest rates have a material impact on the Realty sector as the current EMI is revised upwards as well cost of loans for new borrowers goes up.

If someone plans to invest Rs 10 lakh in H2 2022 – what should be the ideal investment strategy?
At Waterfield, we adopt and disciplined approach while creating portfolios. As part of discipline, Asset Allocation is the starting point of any wealth creation journey.

While deploying, a staggered approach over time enables to ride the volatility and provide better risk-adjusted returns.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)