We have reduced our overweight on the Banking sector. Structurally this sector generates cash from operations on a sustainable basis which provides comfort in the long term. Recently, we have increased our exposure towards the IT sector as we believe earning cut cycle is largely behind now and bottom-up valuation suggest better risk-reward at the current juncture. We had gone underweight IT early last year. In this framework, we have made some changes. We constantly monitor the economy and business dynamics and juxtapose valuations to make the asset allocation in the portfolio. At the same time, volatility also provides an opportunity to invest in mispriced stocks.Īny portfolio additions or exclusions you have made recently and why? In such a scenario, it is important to be focussed on the big picture and build the portfolio accordingly. We believe that it is best to stick to basics amid volatility as the news flow during the period can be overwhelming and many times contradictory too. This style has done well through the market cycle. One of the key criteria for an Investment thesis is cash flows. We look for businesses having durable growth visibility, backed by credible management teams, keeping valuations in sight. We are fundamental driven investment house clearly focussed on BMV- Business, Management, and Valuations. What is your investment style amid volatility?īaroda BNP Paribas AMC investment style remains the same. Given the long-term structural growth outlook, we believe there is a lot of smart money that will find its way into India. One can argue that on a relative basis, Indian equities are expensive compared to other Emerging Markets, but so has been the case historically too given the high growth and better return ratios for the Indian market.Ĭompared to its own history, Indian equity valuations are in line with the last 5 years' average with earnings expected to be higher than the historical trend. Two factors for investors looking for alternatives would be valuations and alternative investment options. Despite the lowered estimates, India is expected to grow at 6.8% in FY 23 and will be the fastest-growing major economy for the third year in a row. India is not an isolated case for a lower GDP forecast. The reduction in global growth estimates is on account of tighter monetary conditions and continuing geo-political conflict. IMF in its latest update has lowered the GDP forecast for the world and for India. What is your take on the GDP data which has slowed down? Do you think this could push away smart money? Investors may consider making some allocation to Gold ETFs or Multi-Asset funds as a diversification tool. Regarding global diversification for retail investors, there are relatively limited avenues, given that the mutual fund industry has exhausted its investment limit in offshore funds. We believe once the global rate cycle stabilizes, FIIs will raise allocation to India. India markets are significantly under-owned by foreigners. India is one of the best structural growth story and offers a diverse basket of sectors and stocks. However, Indian markets have been relatively resilient last year amidst global volatility.Īs per IMF, the Indian economy is expected to continue to be the fastest growing economy, the third year in a row. We have seen one of the highest FII outflows on record. What is your view on global diversification in 2023? FIIs seem to be moving away from India and investing in other EMs and treasury amid higher valuations.Īs interest rates have rapidly risen over last eighteen months, equities in general as well as in India suffered. Retail investors should consider investing in the capital markets through mutual funds that are transparent, highly regulated, and professionally managed. Mutual funds are an efficient investment avenue - both cost-wise and tax-wise. We recommend that retail investors employ the services of a professional advisor or mutual fund distributor to guide them in their investments. Investors are expected to invest with medium-long-term horizon rather than relying on tips or short-term trading. While equity has delivered better long-term returns, a recent SEBI study, reaffirms our belief- over 85% of traders lose money. The heightened surveillance from SEBI is paying off and it is a welcome development. How can retail investors safeguard their interests and save themselves from speculative trades? However, India remains a strong structural story and with the time correction over the last eighteen months, markets are looking fairly valued, and risk-reward appears attractive for medium-term investors. With China reopening there was some FII outflow from India leading to recent underperformance. Finally, a technical factor is also the fact that Nifty has outperformed most global markets during CY22.
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