The overall outlook and investment sentiment towards equity market has improved significantly over the last three months, according to survey of fund managers conducted by ICICIdirect.
Total 58% of the fund managers surveyed expect the market to be up between 15% and 20% after one year.
Opinion, however, seems divided over valuations of the market with 50% of the fund managers believe that equity markets are undervalued while remaining 50% believe it to be fairly valued, ICICIdirect said.
Fund managers are more hopeful of better earnings growth for the next year (FY14) as compared to FY13. Total 75% of respondents expect earnings growth to be in the range of 10-15% in FY14 as compared to 5-10% in FY13.
Private sector banks, FMCG or consumer oriented segment and Media sector has seen increased preference while pharma and IT sectors has witnessed decline in preference, the survey stated.
With expectation of an improved investment climate because of recent government reform action and rate cut expectations by the RBI, most fund managers advise investors to increase allocation towards the equity market.
Most fund managers expect the 10 year benchmark G-sec yield to be lower from current levels of around 8.20% and hence expect G-Sec funds to outperform in the fixed income category.
The survey has covered 12 domestic fund managers from the mutual fund industry.