Don't chase the market on the way up, is the advice from this market strategist

Matt Orton, Chief Market Strategist, Carillon Tower Advisers, has said July had been a fantastic month, and he would not be surprised to see a pullback.

“The rally in July was fantastic. The S&P 500 was up almost 10 percent, we saw breath start to increase across the market, earnings critically had been better than feared, and the Fed was neither dovish nor hawkish, which was enough to let the market start to rally higher,” Orton told CNBC-TV18.

He said he would not be surprised to see more market pullback. “And that is what I have been telling our clients to wait for. Wait for the market to come to you if you want to add a little bit more exposure into your portfolios,” Orton said.

The Indian market has been outperforming the other emerging markets. Orton said it was encouraging that financials, consumer discretionary items, industrials, and energy sectors have been outperforming on a broad-based basis.

From a fundamental perspective, further easing in COVID-19 restrictions also adds a bit of fuel to the economy. If the dollar continues to weaken, that will certainly be a tailwind for the Indian market, the market strategist said.

“Though India is expensive relative to other emerging markets, I think the fact that breath is strong and that it has been outperforming the broader emerging market complex for some time it's not just a recent trend that gives me more confidence in the long-term uptrend for Indian equities. So, I would put Indian equities at the top,” Orton said.

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Meanwhile, Manpreet Gill, senior investment strategist, Standard Chartered, believes there should be a balanced approach between equities and bonds.

“I think it would make sense to add some protection instead of changing fundamental portfolio positioning based on how one geopolitical event could go. To us, it’s still about what the broader economic cycle looks like, and that still draws us back to a balanced outlook on equities and bonds at the moment.”

He added that bond allocation could help, particularly if the risk ends up being larger than expected.

Gill said it was unlikely that India would go into recession. “Indian equities from an absolute good perspective. Growth can slow, but going all the way into recession does seem unlikely, going back through history,” he said.

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