“Corrections can come in, but India will remain an attractive investment destination for the long term,” says Nimesh Chandan, CIO, Bajaj Finserv AMC.
In an interview with ETMarkets, Chandan said: “India is much better positioned then other large emerging markets and even some of the developed markets,”. Edited Excerpts:
Sensex@75K, Nifty@22K – should investors be worried, or do you see FOMO in the market? Where do you see the market headed?
Nimesh Chandan: The equity markets are at an all-time high and so are the Nifty earnings and the Indian GDP. India is well placed in terms of macros, corporate earnings, healthy balance sheets and growth.
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Hence, investors are positive on the equity market outlook. As far as valuations are concerned, our fundamental value indicator shows the Nifty is close to its fair value. It is not overvalued.
Midcaps and small caps as a category are 20%-25% above their fair value zone. Corrections are part of any bull market and hence can come in anytime. However, the equity bull market is likely to continue.
What are you suggesting to your clients now? What are the general queries that you are getting?
Nimesh Chandan: The good thing is mutual funds clients are optimistic but do discuss risks. However, India is seeing lot of new traders in the market looking to make quick gains.
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Studies have shown, for the majority of these traders, such short-term trading doesn\’t create wealth. Through our products and communication, we are suggesting our clients focus on the long term rather than short term.
What could derail the bull rally in FY25? Any important factors that one should watch out for?
Nimesh Chandan: The primary concern is the geopolitical risk. War in the Middle East, conflict between Russia and Ukraine, and tensions between China and Taiwan are some issues markets are grappling with.
An economic slowdown in the US and Europe can be a short-term issue and we may see some recovery by the end of FY25.
We are already seeing outflows from small & midcap funds – and inflows into equity funds also saw a decline. Are MF houses booking profits or staying cautious?
Nimesh Chandan: It is difficult to generalise for all MF houses. For the past 2-3 months, a lot of fund houses have been cautioning investors about the sharp rally in small caps and micro caps that have made many segments in these categories expensive.
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At Bajaj Finserv AMC, we have large cap dominated portfolios which are quality and growth-style oriented. We are using any correction in these set of companies to add to our position.
SIP amount stays above Rs 19000 cr for the second month in a row. Where do you see the monthly contribution headed in FY25?
Nimesh Chandan: SIPs are an important tool for individual investors to participate in the long-term wealth-creation opportunity in the Indian market.
We expect this contribution, in gross terms, to increase further. It is difficult to put an exact number on it.
Gold surpassed Rs 72000 per 10 gm in April and Silver surpassed 82000 per kg – record highs. Where is the yellow metal and Silver headed?
Nimesh Chandan: Geopolitical events like wars historically have caused a rally in precious metals. Also, when future inflation expectations go up, investors may prefer to add some gold to their portfolio as a hedge.
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In recent times, many large central banks have also added gold to their reserves to diversify their holdings. This has led to a sharp up move in Gold. Silver moves within a certain band around gold prices most of the times.
What will work in FY25 – which could turn out to be a volatile year for investors amid elections, US Fed interest rates as well as crude oil prices?
Nimesh Chandan: India is much better positioned than other large emerging markets and even some of the developed markets. Earnings growth is strong with more diverse sectors contributing to this growth.
Early forecasts indicate continuity of the government and policies thereby. Sectors like infrastructure and manufacturing have started performing well after a gap of almost a decade.
Income growth is strong and household spending are moving towards more discretionary spending. These strong fundamentals are likely to attract investment in the Indian markets from domestic as well as foreign investors.
Corrections can come in, but India will remain an attractive investment destination for the long term.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
