Valuations are currently fairly balanced and compelling for a broader move in the market. Midcaps and smallcaps last year had a stupendous run and the largecap space is now picking up steam given the differential valuations that exists.

In the last 6-8 months, the largecaps are up 6-7 percent, while the mid and small caps are down 12-20 percent. Talking on midcap basket, he was bullish on that space and automotive segment looked interesting. However, stocks that are linked to automotive value chain, like commercial vehicles, passenger cars, auto ancillaries etc. looked good for the next two years.

The valuations for building material and consumer durables sector have corrected and the space could be back to good valuations.

The house is neutral on the midcap information technology (IT) space, but thinks the bottom is in place for the pharma space in terms of stock price and valuations. So, the healthcare space should get back into interesting times.

He is also very upbeat on the services sector as every developing economy benefits from this sector as the trade moves from unorganised to organised services. Therefore, spaces from retail, entertainment, hospitality and healthcare will benefit going forward.

With regards to mutual funds, the flows have been fairly good and they are not seeing too much redemption pressure.