Morgan Stanley Mutual Fund is long-term bullish on India. So much so, the nearest view top officials would like to have of the market is two years.
MUMBAI: Morgan Stanley Mutual Fund is long-term bullish on India. So much so, the nearest view top officials would like to have of the market is two years.
Understandably, anything less than that is difficult to take a stand on, given all that volatility.
Jayesh Gandhi, lead portfolio manager for multi-cap equity strategy at Morgan Stanley had this to say at the launch of the AMC’s Across Capitalisations Equity (ACE) Fund, “From a 2-3 year perspective, the markets should continue to deliver positive returns. In 2-3 years, it won’t be surprising if the markets cross new highs.
From a 2-3 year standpoint, corporate growth rates, domestic demand and infrastructure spending should ensure business for corporates remain healthy.”
So, how would it be in the year ahead? Gandhi turned to his boss for a politically correct answer. And Narayan Ramachandran, the managing director and chief executive officer of Morgan Stanley Investment sprung to the act.
“That a serious sort of end is upon us, that the era of the dollar being the reserve currency is coming to an end, and that cash is king, are all credible observations, but with very low probability,” he started.
“The credit market turmoil has inflicted only collateral damage on equity, and our operating view is that emerging markets will shake off this period of extreme volatility,” he said, adding, “2-3 years down the road, who knows, we could have parabolic returns again.”
Using a cricketing metaphor, Ramachandran held forth, “If you can see the first 10 overs through, when the ball is swinging, the rest can be managed.”
According to him, Morgan Stanley is looking at India over 30-40 years, not 5 or 10. That way, he feels the downward bias in the market could well work to Morgan Stanley ACE’s favour.
“This correction stretches the cycle and will be better suited for us to build a portfolio than it was two years ago,” he said.
The investment management division of the world’s second-largest securities firm has had a subdued presence in India since it launched the closed-ended Morgan Stanley Growth Fund in 1994.
Ramachandran conceded that it has missed a step in India over the last few years, but said the mutual fund industry in India “is not set to double or treble, but grow by a factor of 10.” He doesn’t think it’s too late.
Nor does Gandhi, who is sure the momentum would return to the markets before long. “It’s not my view, but the view of economists and experts from all over the world. They feel the US will slip into recession, but get back on its feet by the second half of 2008,” said Gandhi.
Asked for a sectoral view, Gandhi was on safer territory again. Banking and financial services is one sector he likes. Citing the example of utility companies — which did nothing in 2004, 2005 and 2006, and then suddenly came to life in 2007 — Gandhi said it sometimes pays to be contrarian. “It might be prudent to be alive to sectors such as pharma and IT now,” he said.
sanat_vallikappen@dnaindia.net
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