What’s your outlook for equity markets?
We are positive that the markets will go up in the future. A few incidents in recent times indicate the optimism. First, oil price is on a decline, which will stay given the global economic scenario. And, though inflation has not come down as much as one would have wanted it to, it has peaked and has been factored in. As for the interest rates, RBI has not yet loosened them up but it is clear that there will be no further tightening as well. We are looking for a revival in the investment cycle with the policy bottlenecks going away and easing of supply gap. Even now, the valuations are attractive, especially in dollar terms. Though, a depreciating rupee is of concern, it still benefits the export business. All these factors make us believe that markets may go up from here on.
How do you view the investor sentiment as of now?
At present, investor confidence is low. But, it takes a few policy initiatives to change the mood. Investor sentiment would follow once government initiatives start coming in. So, if there are large structural changes announced by the government and steps taken to boost the investors’ confidence, we think investors will again start equity investing.
What are the key things that you will avoid and emphasise in the portfolio of your equity funds?
Just the way we have an approach to stock selection, we also follow a broad theme to avoid certain stocks. We avoid weak businesses and companies which have proved to be mediocre in their respective fields. We also avoid businesses with poor corporate governance. It goes without saying that we keep away from companies which are highly leveraged, with no signs of improvement in underlying businesses.
Portfolio emphasis depends on the investment mandate of the specific fund scheme. For instance, BNPP Equity Fund will invest in growth companies within the large-capitalised stocks. Overall, companies with secular growth and a strong moat will form the bedrock in selecting companies for equity portfolios.