The equity markets seem to have found some strong support. How do you see the markets in the coming months?
To be honest I don’t! I look at markets from a very long-term perspective and some months don’t really matter. However for the short term I think that equity markets are already factoring a business cycle turnaround, hoping that in the near term the elections may have a favourable impact. However, corporate earnings are yet to reflect this optimism. Also, one cannot discount the fact that the FII inflows are also dictating the state of the market to a certain extent. So if the corporate earnings cycle remains subdued you may see equity markets correcting. However, these are near term issues; over the long term I remain bullish on Indian equities.
What are the key triggers for markets to break out in either direction?
A strong government at the Centre that starts clearing the policy cobwebs could be the trigger that leads to more corporate spends. Corporate spends are critical as companies need to realise the value of setting up shop and investing in India. If this happens, then the markets could touch new highs.
What do you make of current domestic macros?
There seem to be a few reasons right now to feel good about India. Under Raghuram Rajan, the RBI has managed to steady the rupee to a large extent. Inflation also seems to be less of an issue for now. As the full impact of lower MSPs and good monsoons has started seeping in, I believe that food inflation can remain subdued this year and thus expect CPI inflation to fall further during the year.
MF houses seem to be getting excited launching new products of late. Any plans from your fund house?
We at Quantum never believed in launching new products, any product launched by fund house should make sense for the investor. If this is not considered it only leads to confusion and eventually investor may end up either avoiding the investment or investing in a wrong product. What investors need are products that help them making sensible long-term returns and build their portfolio.
What would be your advice to retail investors as to how should they approach the current situation?
Our advice is not to focus too much on elections. We focus more on the overall GDP growth and the companies where we are investing and not on who will form the next government. I believe all investors need to follow an asset allocation plan that suits their risk appetite and goals. Investors can gradually invest in equities through SIP or STP. Investment in debt is also a good option.