Fund Manager Talk | Growth may pick up in H2 but base effect may be a challenge: Krishna Sanghavi

After the first two quarters of FY25 were forgettable for India Inc, Krishna Sanghavi, CIO-Equity, Mahindra Manulife, expects some growth pickup in H2FY25 vis a vis H1FY25 as H1 had an impact from elections.

“YoY growth in H2 may be a challenge due to higher base unless government spending picks up sharply,” he says.

Edited excerpts from a chat:

Mutual fund inflows have been strong even when the market is falling. How much cash are you deploying in your portfolios amid the market correction?We normally maintain cash levels in single digits though it may vary vis-a-vis fund types (market cap). The recent market correction has helped us buy/add to few companies as valuations turned better.

SIPs have become a counter-force to selling by FIIs. Do you think the monthly SIP flow can hit the Rs 1 lakh crore mark as soon as 4-5 years?

SIP flows by investors is essentially a function of 1) GDP growth that creates rising income levels and hence savings potential, 2) attractiveness of equity as an asset class for wealth creation in a growth economy, 3) discipline among investors to use market volatility to their advantage. We believe the Indian economy and Indian investors are well placed on these and SIPs would remain a preferred option to invest for the long term.

How attractive does Nifty look after the recent correction? Are you cautious or bullish at this stage of the market?

While Nifty has fallen about 8% from top, the stock specific moves have been varied. While a large part of the fall can be attributed to sharp FII selling, some impact of earnings downgrades too can be seen. We believe markets are more in a consolidation zone post a sizable return since March 2023.

Do you think FII selling is done now and the market will bounce back to lifetime peak once again by the end of the calendar year? What are the chances of a Santa rally this time?

FII flows is an aggregate of a very large number of institutional investors with varied mandates & timeframes. So, it is hazardous to make any guesstimate on flows front. While absolute selling has a high impact on markets as it happened in a short period, the amount is just about 1.7-1.8% of FII total portfolio value in India. Yes, we can always hope for the festive season to bring Santa rally, the bigger picture of growth in Indian GDP, improving macro and rise in corporate earnings is something to be tracked for a sustainable FII flows into Indian markets.

How has your investing strategy changed after the Q2 earnings season? And do you think we will see recovery in H1FY25?

Investing strategy is partly driven by earnings season & management outlook for the near term as well as by change in valuations post the price corrections. Some changes in portfolio construct happens on that count as relative earnings growth across sectors is something we would like to focus on. Going ahead, we do expect some growth pickup in H2FY25 vis a vis H1FY25 as H1 had an impact from elections (labour availability, lower government spend etc). The YoY growth in H2 may be a challenge due to higher base unless government spending picks up sharply.

Which sectors are on your watchlist from a longer-term perspective? And which ones are you staying away from?

Sectoral moves in Indian markets have become quite short term in nature. The re-pricing is happening fast so the attractive/unattractive sectors can change quite quickly based on price moves in the near term. From a longer term perspective, India’s core story of economic growth prices makes quite a few sectors attractive within manufacturing, financials & consumption themes.

The H1 results have shown earnings variation within sectors. We would prefer to stay away from companies where earnings are disappointing.

Q2 earnings has been the season of downgrades. Are you finding some bottom-up opportunities amid the correction?

While overall earnings growth has been muted, financials have reported quite good growth while commodities reported de-growth with the non-financial & non-commodity sectors showing growth. Yes, we do find a few pockets of opportunities post the price corrections as valuations have come down.

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Secular Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – seculartimes.com. The content will be deleted within 24 hours.

Leave a Comment