Mr. Ravi Gopalakrishnan serves as the Head of Equities and Fund Manager at Canara Robeco Asset Management Company Ltd.
- The market seems to be in a frenzy clocking record highs. What do you think is the ideal approach for a new retail investor to participate?
While the Indian Equity markets have reached new highs, the current investment environment has easily sent even the most experienced investors into a frenzy over what sorts of investments to be looked at; let alone the new investors. Understandably, investors don’t want to lose out on the upside of the recent market upswing, but there are ways in which novice investors can try to make the most of their investments. It’s important to remain focused on one’s long-term financial goals in the midst of short-term stock market activity. While it’s tempting to react to current market conditions, first time investors may consider gradually increasing allocation to equities and can adopt a staggered approach of investing via SIP. SIP as a facility not only helps to avoid an exposure to market volatility at once, but also benefits from the power of Rupee Cost Averaging when the markets see a downturn. Having said this, Equity is a long term investment whose inherent potential is realized only by compounding i.e. buy-and-hold strategy. One should never try to time the markets, instead, one should keep investing systematically, as and when there is an investable surplus and an investment opportunity.
- What’s your outlook on the equity market for FY’18?
The bellwether indices are now consolidated in quality companies and the valuation of these companies are reasonably fair. Long term growth outlook is intact though near term scenario could be hazy due to specific unforeseen events. However, on the back of strengthening macro-economic situation and the political as well as regulatory stability in the country, the Indian equity markets are in a structurally constructive phase. The strong macroeconomic condition with the economy geared to shift from informal to formal could provide confidence to the investors and improve the market sentiments. With the improving domestic environment, going forward the equity markets are likely to gather momentum on a longer term owing to inherent structural strengths of the economy with the bottoming of corporate profitability and prospects of domestic flows.
- What themes would you like to play in the current market scenario?
Global growth, at this stage, looks to be at an inflection point and India will remain no different, albeit is expected to continue to grow faster than most other economies. With a stable government at the center and the implementations of various structural reforms, sectors with structural growth drivers (especially domestic economy linked) having low cyclical and commodity related exposure are expected to do well in the near future. Companies in select high conviction sectors like private financials, consumer discretionary, auto, cement & building materials and industrials could be the few sectors which are seen gaining momentum and are expected to grow multifold going forward.
- According to you which are the key events an investor should watch out for and how do you think the domestic equities market will react to these events?
In the recent times, there has been a lot of uncertainty around the legislation in the US. The clarity over the impending key decision by the US could impact the global markets in near term and could be one of the major events to look forward to. The geo-political tension arising due to the US intervention in Syria as well as the North Korea and instability in the Eurozone could be global factors to look out for. Movement of commodity prices like of Crude Oil and the pace of rate hikes in the US resulting into a volatility in the domestic currency market could also result in bouts of intermittent equity market volatility. However, the strong macro-economic factors and positive domestic events could guide the direction of the Indian Equity Markets upwards in the times to come. Implementation of GST is seen to be a big positive for the country causing the formalisation of informal sectors of trade in the country. Expectations of an above average monsoon, contained inflation and a steady growth rate could drive the Indian equity markets in the coming future to new highs.
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