The healthcare, hospitals and power sectors are ripe for value creation as sectors with huge demand lacking supply provide great value said Amit Golia, group CEO at MarketsMojo.

In a conversation with Benzinga India, Golia also talked about how artificial intelligence could change investment style for investors, SEBI’s new asset classes and Q2 results so far. Here are the edited excerpts:

Is the ₹24,000 crore SIP number achieved in September sustainable, especially given the current market volatility?

We anticipate that SIP (systematic investment plans) investments will continue to grow steadily as more individuals shift from a savings-focused approach to an investment-oriented mindset. Financial awareness has increased, and investors are becoming disciplined, prioritising a fixed investment amount each month before allocating their remaining funds towards expenses.

However, as we have observed recently, some investors may take partial profits amid bearish market sentiments and current market declines. This could lead to modest outflows in the coming months as investors may choose to secure profits and wait for the market to stabilise before re-entering.

How do you see AI changing the investing landscape and the behaviour of retail investors?

AI is transforming the investment landscape by making it more accessible, efficient and customised to individual investor needs, strengthening more disciplined and informed investment behaviour.

AI-powered platforms provide investors with rapid, data-rich insights that enable smarter decision-making. With advanced data analysis and insights into various stocks and market conditions, these platforms allow investors to assess potential investments quickly and effectively.

Additionally, AI-driven advisors offer personalised portfolio management, creating tailored investment strategies based on each investor's risk profile and financial goals.

On platforms like MarketsMojo, which uses data science and AI for fundamental research globally, investors have access to in-depth stock and mutual fund analyses. This empowers customers to conduct research, build model portfolios aligned with their risk tolerance and receive investment guidance, enhancing their ability to manage their financial goals with confidence.

Do you think momentum funds have more steam left or other beta funds such as value funds or low volatility funds are going to shine now?

For the month of October 2024, except for IT, all of the indices are in red with the majority of the sector indices falling below 5% and some falling more than 10%. This indicates a sharp turn in momentum and the following month or two could witness a slowdown based on a slowing economy and soft Q3 indicated by many companies.

We feel the value funds should edge out momentum funds as most of the momentum sectors have taken a greater hit, and sustaining such high valuations amidst a muted economy will be difficult.

See Also: Markets May See Heavy Correction Post-Diwali On Lacklustre Earnings, Says Chola Securities’ Dharmesh Kant

In this volatile market condition, which sector is looking attractive and which sector do you avoid? Will thematic mutual funds continue their over-performance or are they faltering?

We are currently focusing on sectors like healthcare, hospitals and power, where demand remains robust and supply constraints present opportunities for significant value creation. These sectors show strong fundamentals and are positioned to benefit from structural gaps between supply and demand.

In the IT sector, we're seeing positive developments driven by a rebound in the U.S. economy, which has helped reduce the high costs associated with talent retention for many companies. Additionally, integrating AI into IT offerings has opened up new growth avenues, further enhancing the sector's outlook.

When it comes to thematic funds, we see clear trends where certain themes outperform at specific times, while others may lag. For instance, during the COVID-19 pandemic, IT and technology themes surged, followed by rallies in PSU, Defense, and Railway stocks in subsequent periods.

However, once these themes peaked, sectors often moved sideways or corrected, showing the inherent risk in thematic investments. Over time, the average returns from these funds tend to align closely with broader equity funds, highlighting that they come with heightened volatility and may not consistently outperform.

Can quant investment-style funds which have not been tested in India over the long term continue their dominance?

Quant investment-style funds, which use data-driven models for investment decisions, have delivered strong results in India and are likely to see increased acceptance among investors. They follow a systematic approach devoid of human biases.

The adaptive nature of algorithms allows quant funds to quickly respond to changing dynamics of the markets, thereby capitalising on emerging trends. Indians tend to favour funds with consistent performance, and if quant funds can demonstrate their ability to generate alpha over time, they are expected to gain broader acceptance and attract wider participation in the market.

What is your market forecast for Q2 and Q3?

Many of the banks, automobile, IT and consumer companies have come up with their September quarter numbers. While the IT companies have managed to delight the market with the U.S. economy reviving, banks, automobiles and consumer companies have disappointed their investors with Bank Nifty down by 4.53% in the month of October, Nifty Auto down by 12.5% and Nifty FMCG down 9.3% in the same period.

These companies have guided for a soft Q3 citing high inflation and reduced discretionary spending in the economy.

What are the challenges investors will face with the Security and Exchange Board of India's new asset class for mutual funds? How should investors educate themselves for strategies like inverse ETFs and long-short funds?

The newly introduced “Investment Strategies” category aims to bridge the gap between mutual fund (MF) and portfolio management services (PMS) by setting a more accessible minimum investment threshold at ₹10 lakh. This lower entry point is likely to appeal to investors who previously could not access PMS or alternative investment funds (AIFs) due to higher minimum investment requirements but still want expert-managed funds.

However, this category also brings higher risks, as it allows investments in derivatives, long-short equity strategies, and inverse (short) ETFs. These types of investments are inherently more volatile and can expose investors to substantial downside risk if not managed cautiously.

Given the relative novelty of these strategies in India, adoption may initially be gradual, with investors likely to monitor performance and assess risks before committing. The success of this category will hinge on its ability to deliver consistent returns while managing the added complexities of derivatives and short-market exposures.

Read Next: Always On Lookout For Synergetic Acquisitions, See Strong Growth Potentional In Insurance Segment, Says BLS E-Services’ COO