Expert view: Recent correction has provided ample opportunities in large caps, says DSP MF's market strategist

Expert view: Sahil Kapoor, Market Strategist and Head of Products at DSP Mutual Fund, believes the recent correction has provided ample opportunities in the large-cap space to build a long-term portfolio. In an interview with Mint, Kapoor said private banks, autos, and healthcare are some themes where valuations and quality are aligned. Edited excerpts:

This is valid as a tail risk. But misplaced as a base case. The real risk is not a spike in oil for a few days, it is oil staying above $120 for long enough to hurt India’s CAD, the rupee, liquidity and inflation.

Oil prices have fallen below pre-war levels, while services and remittances continue to provide a large external cushion.

FY27’s BoP now looks more like a support than a stress. Earning cuts can happen in oil-sensitive pockets, but a broad macro tightening cycle looks unlikely unless oil prices, the rupee, and food inflation all worsen together.

Markets usually look through any disruption which is short-term in nature, for a quarter or a few. It doesn’t pay too much attention unless the risks persist for a longer duration.

For now, these risks have turned. India’s balance of payment may surprise positively in FY27.

We don’t have forecasts or special insights into the next six months. Markets are, by design, unpredictable in the short term.

The recent correction has provided ample opportunity, especially in the large-cap space, to build a credible long-term portfolio and continue allocating to equities.

Flows of any kind should not be the reason or hypothesis of investment.

Corporate earnings are the key driver of stock market returns. Excessive focus on institutional and retail flows is not needed for investors looking to create long-term wealth from equities.

They should be primarily concerned with the price they are paying for the assets they are buying.

We don’t have a short-term investment strategy. Our focus is on finding opportunities where valuations provide a calculable margin of safety.

Corporate balance sheets are clean, banks are healthier, and the system is well-positioned to fund growth.

The missing ingredient is better demand visibility and stronger revenue growth.

We remain focused on finding opportunities in sectors and stocks with reasonable valuations and improving revenue growth.