Aditya Birla Sun Life AMC's Mahesh Patil highlights influence of liquidity on stock prices

Notably, equity mutual funds witnessed a net inflow of Rs 20,161 crore in August 2023. Among the various categories of mutual funds, the small-cap funds, once again, witnessed inflows at Rs 4,265 crore versus Rs 4,171 crore inflows in July 2023. The mid-cap funds saw an inflow of Rs 2,512 crore versus Rs 1,623 crore inflows month-on-month.

One of the standout trends is the growing participation of investors across various sectors. This diversified approach to investing reflects the evolving nature of the market rally, indicating that it's no longer limited to a select few sectors.

Talking about other sectors, Patil expressed optimism regarding the real estate and pharmaceutical industry. These sectors are showing promising signs of growth, offering potential avenues for investors seeking stable and long-term returns.

Despite experiencing a slowdown, the IT sector seems to have weathered the storm and, in Mahesh Patil's view, has bottomed out. This could signal a potential rebound in the near future. Patil further emphasised that investors are increasingly drawn to businesses with a long runway for growth, underlining the importance of sustainable growth prospects. Assessing the global scenario, he mentioned that the United States is experiencing fairly stable economic growth, with no imminent major shocks on the horizon, providing a sense of assurance to investors.

On the topic of interest rates, Patil expects them to remain at higher levels for an extended period, a factor that will have implications for various sectors.

From a long-term perspective, the consumer durables and retail sectors are emerging as promising areas for investment, offering stability and growth potential. Within the retail sector, companies specialising in apparel, footwear, and jewelry are particularly appealing for long-term investments, according to Patil's analysis.

The power equipment sector, characterized as niche and relatively smaller in scale compared to other industries, occupies a unique position in the market landscape.

Mahesh Patil wrapped up by noting that banks had a robust performance in the previous year, partly due to strong Net Interest Margins (NIMs). He believes that banks still offer a favorable risk-reward profile, with the credit cycle behaving prudently.