Mahesh has been with Aditya Birla Sun Life AMC since October 2005. He was awarded the India CIO of the Year, Equity by Asia Asset Management in 2016 and 2018. He has been awarded Chairman's Individual Award by The Aditya Birla group for being an Accomplished Leader in 2015.
He has previously worked at CMC Limited, Tata Economic Consultancy Services, Parag Parikh Financial Advisory Services Limited, Motilal Oswal Securities Limited and at Reliance Infocom Limited.
He holds a Bachelor's Degree in Engineering from the University of Bombay and a Master's degree in Management Studies from University of Bombay.
He has previously worked at CMC Limited, Tata Economic Consultancy Services, Parag Parikh Financial Advisory Services Limited, Motilal Oswal Securities Limited and at Reliance Infocom Limited.
He holds a Bachelor's Degree in Engineering from the University of Bombay and a Master's degree in Management Studies from University of Bombay.
Answer : Most high frequency indicators are suggesting steady economic recovery post the second wave. Exports, imports, IIP, tax collection and PMI are all suggesting steady economic recovery since bottoming out in 1Q. We are on course to reaching 9.5% growth in FY22.
Answer : We interpret this very positively and as a corroboration to our view/expectation of steady economic recovery. The surge is largely in discretionary items and can be attributed to both gradual general normalization in economic growth as well as pent-up demand. Rising merchandise imports, especially in electronics and gold, and elevated trade deficits are also indication of rising consumption demand in the economy.
Answer : There has been a spectacular rise in digital transactions in the economy, rising at record pace with all major components UPI, IMPS, RTGS, NETC etc rising between 30 to 150% y-y. Rising digital transaction is very positive for formalization of economy and should also help in better tax and other regulatory compliance. We are already witnessing a very strong tax collection with all major taxes both direct and indirect, growing much faster than the budgeted expectations and what can be explained purely by economic recovery. Gross tax collection in FY22 is expected to be at least 1 lakh crore more than the budgeted levels, despite the fuel tax cut and shock of strong delta wave of Covid.
Answer : Globally, equity markets have climbed a wall of worry and are at record highs driven by strong earnings growth. Headline valuations are at a 15-35% premium to their long-term averages in the US, Eurozone, and Emerging Markets. Even in India, 1-yr forward P/E multiples are at a 20% premium to their long-term average. Midcap and Smallcap valuations are also at elevated levels after the recent rally. However, we need to bear in mind that the Indian economy and earnings are not fully normalized yet. And hence the valuation multiples can get artificially inflated.
In the current environment, one has to take a stock-specific view. Hence, in our key equity funds, we are market-cap agnostic and are identifying investment opportunities across large/mid/smallcaps. Given the high valuations, we have reduced the beta of the portfolio. From a sectoral/thematic point of view, we are positive on a) Banking and Financials as credit growth should improve along with the economic recovery, b) Real Estate as it is on an upcycle and sectors which benefit such as Cement, Metals, Building Products, Consumer Durables and Electricals, etc., c) Low-ticket Consumer Discretionary, Retail, and Auto consumer spending is expected to be strong, d) Industrials and Capital Goods as the sector will benefit from the PLI Scheme and order books are growing as well as Infrastructure, and e) Digital & Tech as it can see secular growth over the next decade.
In the current environment, one has to take a stock-specific view. Hence, in our key equity funds, we are market-cap agnostic and are identifying investment opportunities across large/mid/smallcaps. Given the high valuations, we have reduced the beta of the portfolio. From a sectoral/thematic point of view, we are positive on a) Banking and Financials as credit growth should improve along with the economic recovery, b) Real Estate as it is on an upcycle and sectors which benefit such as Cement, Metals, Building Products, Consumer Durables and Electricals, etc., c) Low-ticket Consumer Discretionary, Retail, and Auto consumer spending is expected to be strong, d) Industrials and Capital Goods as the sector will benefit from the PLI Scheme and order books are growing as well as Infrastructure, and e) Digital & Tech as it can see secular growth over the next decade.
Answer : Given the sharp rally in markets this year, the key question in the minds of investors is whether to remain invested in markets or book some profits and enter the markets again if and when there is a correction. However, we all know that it is difficult to time the markets. In such a scenario, Balanced Advantage Funds are a suitable product for investors. They aim to provide a return which is a couple of percentages above Fixed Income with low volatility.
Currently, most Balanced Advantage Funds in the industry have 35-40% allocation to Equity and the remaining to Fixed Income. And in case there is any correction then these funds can increase the equity allocation. So, instead of trying to time the markets, investors can just invest in a Balanced Advantage fund and the asset allocation call is taken within the fund at appropriate times. Balanced Advantage funds are especially suitable for new investors looking to get into equity.
Currently, most Balanced Advantage Funds in the industry have 35-40% allocation to Equity and the remaining to Fixed Income. And in case there is any correction then these funds can increase the equity allocation. So, instead of trying to time the markets, investors can just invest in a Balanced Advantage fund and the asset allocation call is taken within the fund at appropriate times. Balanced Advantage funds are especially suitable for new investors looking to get into equity.
Answer : Given the elevated headline valuations and with Fed tapering, rising yields, and stronger dollar, FII flows to Emerging Markets, including India, can be impacted. Hence, we continue to maintain a cautious stance on markets in the near term (i.e. next 2-3 months).
At the same time, Indian economic recovery has been boosted by festive cheer with festive spending at an all-time record. High performance indicators continue to show improvement across the board although high oil prices remain a concern. We remain constructive on India's growth going forward as the three key drivers of the economy viz. Consumption, Investments, and Exports are all showing an upward trajectory. India has been late in the recovery process versus developed markets but has the potential now to catch up. Consequently, a recovery in earnings growth is also expected and we remain constructive on the Indian market for the next 3-5 years. Overall, market still has legs to continue rising in the medium-to-long-term although we may see intermittent corrections. Investors should use any correction to add to their equity exposure.
At the same time, Indian economic recovery has been boosted by festive cheer with festive spending at an all-time record. High performance indicators continue to show improvement across the board although high oil prices remain a concern. We remain constructive on India's growth going forward as the three key drivers of the economy viz. Consumption, Investments, and Exports are all showing an upward trajectory. India has been late in the recovery process versus developed markets but has the potential now to catch up. Consequently, a recovery in earnings growth is also expected and we remain constructive on the Indian market for the next 3-5 years. Overall, market still has legs to continue rising in the medium-to-long-term although we may see intermittent corrections. Investors should use any correction to add to their equity exposure.