Mr. Sailesh also manages the Largest Pharma Sector Fund in India since its inception 15 years back in May 2004, in addition to managing Nippon India Consumption Fund - a broad based Consumption Thematic product since 2004. He also advises on international mandates for some strategies for the last 5 years.
Answer : The GDP recovery was largely in line with the expectations and was led by segments like construction, manufacturing and farm output. The numbers also indicated that the devastating 2nd wave of infections had much lesser economic impact than the first one. Going forward the economy is expected to benefit from normalization with most parts of the country are opening up, policy support like PLI etc along with accelerated vaccination drive.
Answer : National Monetisation Pipeline (NMP) involves leasing out State owned infrastructure assets to wherein NMP estimates aggregate monetisation potential of Rs 6 lakh crore for a 4-year period between FY 2022 to FY 2025. This move will help fund the infrastructure creation across the country without involving any additional financial burden for the Government. The estimated funding is approx. 14% of the proposed outlay of 43 lakh crs (by Central Govt) under National Infrastructure Pipeline. The monetisation exercise can help create employment opportunities while improving the efficiency & quality of public assets & services.
Answer : Equity market rise has been led by a combination of factors like strong earnings outlook, global growth revival as well as less attractiveness of other alternative on the back of lower rates. The recent up move in the markets has led to some elevation in valuations in India. However, the strength of earnings recovery has surprised markets. Earnings acceleration has been strongest in years where several companies are beating expectations. Given the early start of cycle, normalised earnings growth is likely to beat nominal GDP growth for the near term. We are confident that profit to GDP ratio in India will continue to rise in a foreseeable future. A significant part of India's earnings is linked to global demand oriented (Exports) and global commodities sectors. Large banks, metals, cement and IT are sectors which are likely to drive earnings growth.
More importantly the earnings recovery is also broad based making it more sustainable. The low base of earnings of the last five years and measures like PLI, China Plus One opportunities and benefits of past reforms are yet to flow through.
Answer : It is well accepted in the investing world that Market Timing attempts have a very low success ratio and on the contrary we have observed that the long-term investors have enjoyed a better experience despite divergent market cycles. For instance, over the last 40 years S&P BSE Sensex has generated ~15% compounded returns despite the various bull & bear market cycles in the interim.
Current market conditions present a conducive environment for a growth revival supported by key enablers like lower rates, higher liquidity, pick up in domestic & global capex/manufacturing activities, anticipated normalization aiding in demand improvement. From an equity perspective the estimated strong revival in earnings is an important market driver.
Hence in backdrop of all these we believe the medium-term outlook for equities is optimistic. Also viewed on a relative basis to the available alternatives, the asset category can potentially outperform over the next few years.
In case investors are concerned by any potential market corrections or higher volatility they can consider participating in a staggered manner through SIPs/STPs, which can potentially reduce or even out ups & downs. Alternatively based on the risk appetite even Balanced Advantage or Dynamic Equity products can be considered as these products offer better downside risk management with equity participation.
Answer : Domestic demand driven sectors like manufacturing, capital goods, hospitality, etc appear poised for a material recovery in growth especially given its low base in the last several quarters. China plus one or areas which can benefit from likely business shift to India, new age businesses thriving on technology led disruption, consolidators across segments (established players gaining more market share) and normalization beneficiaries (especially areas like Retail, Tourism etc which were severely impacted due to restrictions) are some interesting themes
Global sectors can witness a consolidation given their already strong performance in FY21 and the rise in valuations. The key risks which can emerge are from inability to pass on higher commodity prices by companies, rebound in inflation and its impact of demand. Festive season will be a clear reflection of the impact on incomes due to the covid pandemic and any disappointment there will be important to watch. Also, global shifts in interest rates/liquidity driven by central bank action will be a key factors to watch.
Answer : Diversification of investments across categories with relatively lower correlation, investment discipline and objective rebalancing (without any bias) are the key to achieving investment goals. Accordingly, its important re-balance and align the portfolio in line with the targeted goals, more so if there is significant change in a category skewing the portfolio allocation.
We believe the current environment is supportive of a domestic growth revival with many segments contributing and even global growth outlook is reasonably strong. Also, from a macro angle the relative attractiveness of equities combined lower penetration can potentially lead to higher allocation of domestic savings toward equity. At the same time there are near term concerns like rising inflation, change in stance by Central Banks on easy liquidity and lower rates and healthcare uncertainty – potential 3rd wave etc. In our understanding its very difficult to predict short term and therein the investment discipline & objective re-balancing are very important, while over the long run some part of the market cyclicality tends to even delivering a better investment experience.
As economic growth revives, we envisage a virtuous cycle for the country over the next few years, which is likely to be reflected in the equity market performance as well. Hence notwithstanding near-term event led volatility the outlook for equities remain optimistic from a medium to long term perspective. Thus its important for long term investors to adhere to their planned investment horizon without being swayed too much by near term news-flows.or even out ups & downs. Alternatively based on the risk appetite even Balanced Advantage or Dynamic Equity products can be considered as these products offer better downside risk management with equity participation.