Amidst recent market corrections, Mohit Khanna, Fund Manager at Purnartha Investment Advisers, remains optimistic about India's economic growth trajectory. He asserts that while the market has seen significant adjustments, these changes have created more favorable entry points for investors. Over the next two years, Khanna anticipates a positive outlook driven by improved valuations and earnings recovery. Although short-term volatility is expected to persist, he believes that clients investing now will reap benefits in the medium term. The fund manager also highlights the importance of strategic investment in sectors like FMCG, consumer goods, and healthcare, while maintaining a cautious stance on financials due to ongoing challenges.

The Indian market has undergone substantial corrections, leading to concerns about further downturns. However, according to Mohit Khanna, these corrections have largely eliminated excessive market speculation, making current valuations more attractive for new investors. While some residual excess may still exist, Khanna emphasizes that entering the market at today’s levels offers a higher likelihood of profitability. He points out that the underlying growth story of India remains intact, with projections indicating a promising outlook over the next two years. Investors should anticipate continued volatility in the near term, but Khanna reassures that those who invest now will likely be satisfied with their returns in the medium term.

Khanna elaborates on the valuation landscape, noting that while the overall market might appear slightly overvalued at an index level, there are numerous pockets of value across various sectors. In particular, midcap and smallcap stocks have experienced significant corrections, presenting attractive opportunities. The fund manager advocates for a bottom-up strategy, focusing on companies poised for earnings recovery. This approach allows investors to capitalize on undervalued assets while avoiding broader market risks. Additionally, Khanna discusses the automotive sector, where he sees potential in both traditional internal combustion engine (ICE) vehicles and emerging electric vehicle (EV) players. The two-wheeler segment, especially, offers a balanced opportunity as companies transition from ICE to EV production.

In terms of sectoral bets, Khanna reveals that his midcap fund prioritizes investments in FMCG, consumer goods, mining, and healthcare. These sectors are expected to benefit from rural recovery and defensive positioning. Notably, the portfolio allocates 35% to rural-focused investments and another 35% to defensive plays, with smaller allocations to capital goods, defense, railways, and mining. Financials, particularly lenders, receive less emphasis due to lingering concerns over net interest margins (NIMs) and microfinance issues. Khanna acknowledges that while financials offer valuation comfort, they lack the positive triggers needed to drive meaningful growth in the midcap space. Instead, he focuses on market infrastructure financials, which present a structural growth story.

Mohit Khanna concludes by emphasizing the importance of strategic portfolio management. Recent adjustments included increasing allocations to defensives and consumer recovery sectors, which have performed well over the past few months. On the selling side, Khanna adopts a bottom-up approach, divesting from companies that no longer align with long-term growth narratives. Moving forward, he stresses the need for companies to deliver consistent revenue and profit growth, as this will differentiate top performers from underperformers. Overall, despite short-term volatility, Khanna remains confident in India's growth prospects and advises investors to take advantage of current market conditions.