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  • Investors Should Enter The Market Through Mutual Funds, Not Stocks

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    - The CEO of Sundaram Mutual believes that valuations in many sectors will be justified by expected earnings growth despite being higher than long-term averages. - He expects July-September earnings to benefit commodity intensive and highly leveraged companies as the impact of lower commodity prices starts to be reflected. - The interest rate cut will boost rate sensitive sectors and overall economic growth is expected to reach 8.5% helped by consumption growth and investment.

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    - The CEO of Sundaram Mutual believes that valuations in many sectors will be justified by expected earnings growth despite being higher than long-term averages. - He expects July-September earnings to benefit commodity intensive and highly leveraged companies as the impact of lower commodity prices starts to be reflected. - The interest rate cut will boost rate sensitive sectors and overall economic growth is expected to reach 8.5% helped by consumption growth and investment.

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    15 Ansichten2 Seiten

    Investors Should Enter The Market Through Mutual Funds, Not Stocks

    Hochgeladen von

    mahamuninaresh1
    - The CEO of Sundaram Mutual believes that valuations in many sectors will be justified by expected earnings growth despite being higher than long-term averages. - He expects July-September earnings to benefit commodity intensive and highly leveraged companies as the impact of lower commodity prices starts to be reflected. - The interest rate cut will boost rate sensitive sectors and overall economic growth is expected to reach 8.5% helped by consumption growth and investment.

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    'Investorsshouldenterthemarketthroughmutualfunds,notstocks'
    Lastupdatedon:October19,201616:10IST

    'Theyshoulddecidetheirallocationbasedontheirriskappetiteandage,andnotvaluations.'

    "W

    e expect India to be a significant beneficiary of FII allocation to emerging markets," SunilSubramaniam, chief executive
    officer,SundaramMutual,tellsAshleyCoutinho/BusinessStandard.
    Subramaniambelievesthatvaluationsinmanysectorswillbejustifiedbytheearningsgrowthandthedropincommoditypriceslast
    yearhasnotyetreflectedincompanyearnings.
    Doyouthinkthemarketisovervalued?
    Wedonotbelievethemarketisovervalued,giventhestageatwhichtheeconomyis.
    While the valuations are higher than longterm averages, several sectors, such as capital goods, are still not fully reflecting the
    growthpotential.
    Themarketisstilldiscounting201617earnings,butastheOctoberearningscomethrough,thefocuswillshiftto201718earnings.
    Onemoreyearofearningsgrowthwillbefactoredin,soyouwillseevaluationsinmanysectorswillbejustified.
    HowdoyouseetheJulySeptemberearningspanningout?
    Thedropincommoditypriceslastyearhasnotyetbeenreflectedincompanyearnings.Thatimpactshouldstartcomingthroughthis
    quarter.
    Broadly,commodityintensiveandhighlyleveragedcompaniesmightshowwideningmarginsinthecomingquarters.
    FromApril1,wehadthemarginalcostbasedlendingrate(MCLR)comingintoplay,whichwilllowerinterestcostsforcompanies.
    Sointhenexttwoquartersratesensitiveandcommodityintensivecompanieswillshowbetterprofitmargins.
    Thirdly,orderbookswillreceiveaboostfromfestivedemand.
    Whatisyourviewontheeconomy?

    TheinterestratecuthasshownthattheRBI(ReserveBankofIndia)isshiftingitsfocustowardsgrowth.
    Theratecutwillbenefitratesensitivesectors,especiallyduringthecomingfestiveseason.
    Themonsoon,SeventhPayCommissionandtheratecutwillcreateincreaseddemand.
    Thegoodsandservicestaxcanboostgrowthto8.5percent.
    TheconsumptionboostledbythemonsoonandtheSeventhPayCommissionwilldrivethefirstlegofeconomicrevival.
    Thecapitalexpenditurecyclewillrecoverwhenconsumptionshootsupandthecapacitygapnarrows.
    Mutualfundshaveremainednetbuyersofequities.Willthetrendcontinue?
    GrowthinsystematicinvestmentplansispeggedataroundRs4,000crorepermonth.
    ThismeansroughlyRs50,000crore(Rs500billion)iscominginwitha3to5yearhorizon.
    Fundshavebeenbuyingcontinually,whichiswhyeventslikeBrexithavenothadmuchimpactonthemarket.
    WhataretherisksforFIIflows?
    FIIflowswillbesensitivetointernationalnews,thetimingoftheUSinterestratehikeandtheoutcomeoftheUSelections.
    Buttheimpactwillbelargelyinlargecapsandlargemidcaps.
    TheUSratehikewillbeapositiveinthelongrunasitwillbenefitIndia'sexportprospects.
    Largecapsmayseeacorrectionintheshorttermfollowingtheratehike.
    JapanandEuropearenotshowinganysignsofrecovery.Whilequantitativeeasingmaybeslowingdown,thenegativeinterestrate
    cyclemeansmoneywillflowinsearchofhigherreturns.
    WeexpectIndiatobeasignificantbeneficiaryofFIIallocationtoemergingmarkets.
    Whatisyouradvicetoinvestors?
    Investorsshouldenterthemarketthroughmutualfunds,notstocks.
    Theyshoulddecidetheirallocationbasedontheirriskappetiteandage,andnotvaluations.
    Valuationsreflecthighergrowthexpectations,whichwebelievewillplayout.
    Also,investorsneedtoavoidshiftingmoneyfrommidcapstolargecapsjustgoingbyvaluations.
    Inagrowingeconomy,thesmallercapsarelikelytodobetterthanmidcapsandlargecaps.
    AshleyCoutinho
    Source:

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