While there could be some amount of nervousness in the market, the upcoming general elections are likely to have just a short-term impact, said Atul Kumar, Head-Equities, Quantum Mutual Fund.
In an interview to Moneycontrol, Kumar said India’s long term story remains intact.
“India’s GDP has grown historically at 6.2 percent over a long history, which is likely to continue for a coming decade. This will translate into nominal GDP growth of 12 percent approximately and listed companies are also likely to see their earnings compounding at similar rates,” Kumar said.
Apart from elections, the market will be dictated by corporate earnings growth and liquidity.“Earnings growth is crucial; profitability has been stagnant for the last four years for S&P BSE Sensex on an aggregate basis. Liquidity could have some impact if it dries,” Kumar said.
In terms of investment strategy, Quantum MF follows a sector-agnostic approach.
Kumar pointed out that since September 2018 non-bank financials, materials, and automobile sectors have corrected making valuations attractive for selective names.
Since September, BSE Auto Index has fallen 24.75 percent.
Speaking about the outlook on rupee Kumar said, “Over the long term INR has depreciated against US dollar. This is likely to continue following the interest parity principle. Our inflation is likely to remain higher than developed markets leading to currency depreciation.”
On March 29, the Indian rupee was trading at 69.17 a dollar. It had touched a high of 74.44 early October.
As at the end of February, the fund house had cash levels of around 6 percent.
“Given the upside that we see in the portfolio and new names added, cash has reduced. If stocks correct further, our cash levels can decline even further. The rise in markets, on the other hand, can lead to an increase in cash.”
Over the long term, the fund house is optimistic on Indian equities. He feels India is likely to grow faster than many nations.Kumar advised investors to put more money given that the valuations appear more reasonable. In the October-December quarter, the average assets under management of Quantum MF stood at Rs 1,287 crore, up 3.71 percent from the previous quarter.