DAILY VOICE | Inflation will be the biggest risk to bull market if it continues to increase: Yogesh Patil of LIC MF

Market Outlook

Yogesh Patil, Fund Manager- Equity, LIC Mutual Fund, feels that if inflation keeps rising, it will be the biggest risk to the bull market. Overall, they are positive on the market over the next 3 to 5 years.

Prior to this, he was a research analyst with Sahara Mutual Fund and progressed his career as a Senior Fund Manager (Equity) with Canara Robeco Mutual Fund. Patil has about 15 years of investing experience.

In an interview with Moneycontrol’s Kshitij Anand, he said domestic consumption, private banks, logistics and IT are some of the themes that are looking attractive, going ahead.

Here are edited excerpts from that interview:

Q) After the initial sell-off by FIIs in the first week of March, things seem to be stabilising now? Which phase of the bull market we are in?

A) Yes, FII trend has reversed in the last fortnight and a lot depends on inflation coupled with other macro data. Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria, so corporate profits have to support earnings.

Q) The financial year FY21 is coming to an end and Nifty50 has rallied by about 30%. What really stood out for you in the last 12 months?

A) India is one of the fastest-growing economy in the world with the highest proportion of millennials, there are a lot of other drivers supporting India’s growth like consolidation, digitalization, reform, domestic manufacturing, etc., we positive in long term.

Q) Where do you see markets heading in the next financial year. Any target which you have for Sensex and Nifty?

A) It’s very difficult to predict index because of composition and it depends on a lot of parameters but we are positive on market over 3 to 5 yrs.

Q) Small & Midcaps came to the limelight in FY21 and do you think the momentum will continue in FY22 as compared to large caps?

A) After demonetization, many small and mid-cap companies were struggling to recover and it seems they are growing by gaining market share.

At some point in time, investors have to consider small and midcaps because some of the industry leaders are only available in this segment. So coming to the point, after a sharp run-up, investors have to take a long-term view in small and midcaps.

Q) Any event or risks which investors should watch out for in FY22?

A) Inflation is the biggest risk if it continues beyond the point.

Q) Which sectors will hog the limelight in FY22 and why?

A) We are positive about domestic consumption, Private banks, logistics and we also like IT due technology transformation globally.

Q) Are there any vaccine plays which investors could look at in the next 6-12 months?

A) Logistics and UCP industry will benefit but will have limited impact on long term.

Q) Do you think more retail investors will join D-Street in FY22? They made it clear that the new-age investors are well-informed and know about the products.

A) Because of digitalization and better smartphone penetrations in India, the flow of information is all-time high and it will improve further, new-age investors are more interested in optimal asset allocation.

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