In an interview with Moneycontrol, Vivek Sharma, Investment Head at Estee Advisors, stated that a slight increase in the fiscal deficit target for FY26—if positioned as a strategic move to drive growth—may not trigger a negative market reaction, especially given the prevailing strength in global and domestic economic indicators.
He noted that with easing inflation pressures and India's economy on a steady growth path, a well-articulated fiscal strategy focused on expansion could be perceived positively by investors.
For long-term investors, Sharma emphasized that market declines should be seen as opportunities to buy at lower valuations rather than causes for concern. A seasoned professional with two decades of experience in trading and investment, he firmly believes that equity markets reward patience and discipline, while proving unforgiving to those driven by desperation.
Do you think the market will not be worried even if the government makes a small increase in the fiscal deficit target for FY26 to focus on growth?
The market's reaction to a small increase in the fiscal deficit target for FY26 will depend on several factors, including the broader economic context and investor sentiment. Historically, markets can be sensitive to changes in fiscal policy, especially if they signal potential inflationary pressures or increased borrowing costs. However, suppose the increase is perceived as a strategic move to stimulate growth, particularly in a context where global and domestic economic indicators are positive. In that case, the market may not react negatively.
Given the current economic outlook, easing inflation pressures and a positive growth trajectory for the Indian economy, a well-communicated fiscal strategy focusing on growth could be seen as a positive move. The key will be how the government plans to utilize the increased deficit to drive economic growth and whether these plans align with investor expectations.
Have you reduced your weight in the capital goods and utilities sectors?
In the utilities sector, we have reduced our allocation; however, in capital goods, our current allocation stands at approximately 10%.
Do you see the RBI announcing an interest rate cut in the February policy meeting?
The RBI's recent bond purchases have raised expectations of a possible rate cut in February, signalling its focus on supporting growth amid economic uncertainties. However, the decision will hinge on key factors such as inflation dynamics, global market conditions, and domestic economic trends, making it a closely watched move.
Do you think the worst is behind for the equity market?
I don’t think we’ve seen the worst yet. A 10% correction after a 100% gain doesn’t quite qualify as the “worst.” Equity markets demand patience above all else. Many investors who joined the market post-COVID haven’t yet experienced how challenging and demanding the markets can truly be.
For instance, the Nifty Smallcap 100 index remained effectively flat from January 2018 to March 2023. This means investors who entered before January 2018 didn’t see positive returns for over five long years. Then, from March 2023, the index nearly doubled before the latest correction we’re witnessing.
Equity markets are a friend to the patient and a foe to the desperate. You can build tremendous wealth by staying patient and investing systematically over the long term. On the other hand, chasing returns or attempting to time your entry and exit points is often a recipe for disappointment.
It’s difficult to say whether the worst is behind us or yet to come. But, for a long-term investor, it ultimately doesn’t matter. A market decline should be viewed as an opportunity to buy at lower valuations, not something to fear. With a disciplined and long-term approach, the inevitable market fluctuations become less of a concern and more of a stepping stone toward wealth creation.
Do you still see a threat to the market from potential Trump policies?
Political factors, such as potential Trump policies, can indeed influence market conditions, but they are just one of many factors affecting the markets. At Estee Advisors, we employ a data-driven approach to investing, which includes analyzing sentiment factors that are also influenced by policy changes. This allows us to adapt our portfolios based on the latest market data. Our quantitative approach enables us to process information swiftly, providing an edge in execution.
What is you strategy behind Estee Long Alpha Fund?
Long Alpha uses a directional strategy aimed at consistently outperforming the benchmark equity index while maintaining low volatility. This is accomplished through a quantitatively managed, systematic rule-based trading model that removes human subjectivity.
The strategy targets the S&P BSE 500 universe, utilizing a blend of technical and fundamental factors to identify investible businesses. A key aspect of our strategy is its multi-factor approach, which involves analyzing over 130 factors, including fundamental, technical, and macroeconomic elements, to create a robust portfolio that adapts to current market conditions.
The fund is sector-agnostic and diversified, limiting concentration risk and providing stability by diversifying across market caps, factors, and sectors to ensure a balanced portfolio.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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