Moneycontrol
Sep 22, 2017 03:25 PM IST | Source: CNBC-TV18

Several new investors entering market, but returns expectations have reduced: Aditya Birla Sun Life AMC

Mahesh Patil of Birla Sun Life believes that the Street currently could be reacting to cues such as higher current account deficit (CAD), pressure on the rupee and developments around fiscal deficit as well.

Weakness in the market continued from the previous session, with the Nifty breaching 10,100 in the opening tick. The Sensex fell over 200 points intraday, following global weakness as well.

Barring pharmaceuticals and IT, sectoral indices were trading weak and in the broader markets, midcaps continued their correction.

Aditya Birla Sun Life AMC believes that the Street could be reacting to cues such as higher current account deficit (CAD), pressure on the rupee and developments around fiscal deficit as well.

“Oil prices, too, are inching higher and a breakout above USD 60 levels could lead to a negativity in the market,” Mahesh Patil, Co-Chief Investment Officer, Aditya Birla Sun Life AMC told CNBC-TV18 in an interview. However, this is still not an alarming situation on the market, he said, adding that as long as oil is in control, there would be no pressure on the rupee as well.

Speaking on ballooning inflows into equity mutual funds and subsequently, in the markets, Patil said that the record Rs 20,000-crore inflow trend may not continue and settle at Rs 10,000-odd crore flows monthly. “There are many new and first-time investors coming in, which is increasing the breadth. This is a good sign,” he told the channel.

Having said that, investors are aware of the returns risks as well. “The expectations have come down…nobody is speaking about 20 percent returns now. People are coming to the market looking at low-teen returns,” he said. Probably, there could be a scenario of negative returns for a short term, but as long as long-term investments continue, this should not be an issue, he added.

On the NBFC space, Patil believes that the overall sector has a better long-term growth outlook. Pain in the microfinance space was stabilising now, while on the mortgage finance front, some concerns on LAP continue to be there. A few small financing options could perform well and the sector still gives a good growth in the broader market, he told the channel.

Meanwhile, on the rally in pharmaceuticals space, Patil believes this is a good sector to look at, but with selective names. Some companies are getting clearances faster than anticipated as well.

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