Axis MF’s views on the massive rally, GST effects and more…
Jinesh Gopani is Head – Equity for Axis Mutual Fund. He has an experience of over 17 years in capital markets of which 10 years are in equity fund management
Q1. The Indian markets are going through a massive bull phase. With major indices clocking a rally of over 14% in just 5 months, do you view this as a case for worry?
Given such a sharp rally in the past few months, there is always a risk that investors get carried away and don’t stay mindful of normal market risks. At any stage in the market what works is a long term orientation and quality stock selection. Over the long term we remain positive on earnings growth picking up meaningfully which should help the market.
Q2. With markets at peak level, what asset allocation strategy would you recommend to retail investors?
First time investor can should look at regular investing and asset allocation. Investors with higher risk appetite can invest through multicap funds that offer a mix of large and midcap companies. All investors should avoid timing the market or investing with a shorter horizon.
Q3. What impact do you think would the GST rollout have on the domestic equity markets? With GST implementation as a trigger event, which sectors would you choose to be overweight on?
As largely expected, GST rollout may cause temporary supply chain interruptions as companies transition to the new regime. However, we believe that the market may not be impacted much. GST play is most positive for domestic consumption oriented companies and companies that can benefit from the unorganized to organized play.
Q4. Do you think that current valuation of Indian equity markets is stretched beyond rationale? What are your views on earnings revival?
Valuations have to be seen in the context of the economic cycle. We believe there is enough room for earnings growth revival once GDP growth picks up over the next couple of years. Further, GST implementation can have an impact on the formal sector of the economy which can lead to higher than estimated growth in earnings. The market is forward looking and is pricing some of these positives in the current valuations.
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to ` 1 lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Ltd. is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.
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