Market volatility offers investors opportunities to participate: Reliance MF
Sailesh Raj Bhan, Deputy CIO – Equity Investment at Reliance Mutual Fund, is of the view that the corporate earnings would take precedence over election results going ahead.
“In my judgement, earnings play is still yet to be visible and played out in Indian equity markets and that is a critical play in three years leaving aside the volatility that elections might induce,” Bhan said in an interaction with CNBC-TV18 on December 4.
Bhan expects earnings to improve going ahead. “Last 3-4 years were bad for Indian earnings on the whole but now we are seeing they are starting to improve and so investors need to focus on the fundamentals on the ground than one or two macro tailwinds.”
Talking about the portfolio strategies ahead of key state elections and general elections, he said, “Investors should not miss out on opportunities for the next three years, for the next three months because of volatility due to elections, especially investors looking at longer term equity participation. In fact, the volatility that exists today is creating opportunities for people to participate.”
“Consumption space is a strategy because that space is very relevant from an India point of view and so the opportunity for consumption space remains. However, certain pockets like staples are still expensive and other sub categories of consumption like autos, durables are far more attractive. On the whole consumption remains a solid long-term India strategy because it has all the three drivers like premiumisation driver, the penetration driver and the new category driver,” said Bhan.
With regards to the banking sector, he said. “We prefer the corporate lenders because they have strong CASA deposits and have capital for growth. Moreover, the space is undervalued and so an attractive opportunity.”
On the pharma space, Bhan said, “The focus should be on whether the businesses are doing well and if they are rightly positioned for the next few years. Lot of companies are working to correct their cost structures, their focus areas, improve productivity of R&D, he said. In the last five years with an exception of 1-2 years, a lot of these companies have been growing at 20-25 percent but now the reality is that they will growth at 12-15 percent and so their cost structures need to be realigned.”
“The longevity of Indian pharma businesses is very good and hence sector is well positioned for growth. Moreover, the domestic business is underrated,” he said.
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