Upside limited in largecap stocks right now: Quantum AMC

In an interview with Moneycontrol.com, Jimmy A Patel CEO of Quantum Asset Management Company Pvt Ltd, spoke about his reading of the current market environment and the road ahead.

Below is a verbatim transcript of the interview.

Q: With the global economy witnessing positive announcements from the US and a downgrade in Europe, where do you see the Indian markets heading?
A: Interestingly, there have been significant FII inflows in the Indian markets during the past couple of weeks. However, you can never rule out uncertainty completely, and as such even though there might be the possibility of any untoward event in US or Europe, right now foreign investors are treating Indian markets favourably. Though markets may sustain at present levels, the valuations of large cap companies look full and there is limited upside from current levels.  

Q: With inflation levels riding high, what would you say is the overall Indian investor sentiment?
A: Yes, inflation is currently high, but considering that the monsoons keep up their good work, food inflation in specific could fall. The outlook for commodities such as crude and metals, which are an important constituent, is also likely to remain soft. Growth in developed countries is looking lean, and China might slow down as well. Ironically, there will always be a certain level of inflation in an economy like India which is growing at 8%+ levels.

Q: For a retail mutual fund investor, what should the strategy be at current levels given the expensive valuations?
A: Investing in mutual funds must have a long term approach. In such a scenario, Systematic Investment Plans (SIPs) would help to average out costs. Irrespective of existing levels, investors must avoid timing the market, and rather look at regularly parking away savings to create wealth over the long term.

Q: What would you advice investors at this point of time those who are already invested and those who still are waiting to invest?
A: Investing is much simpler than it appears. When you invest you should set financial goals for yourself, and if you are already invested, then don’t think about when would be the right time to exit, rather keep in mind your financial goals. Choose to exit only when your invested corpus is capable to fulfil your financial goals.

Q: What mutual fund product would be best suited in this kind of market?
A: Before you decide to invest, you should ascertain your risk appetite, and accordingly take a look at your asset allocation. Your asset allocation would be ideal to understand whether you should invest in equity, debt or gold, and also to what proportions. It helps to realise that your risk appetite is not dependent on market swings.

Q: How do you plan to make the India growth story work for you? What are your growth plans?
A: The India growth story is a sure bestseller. As the country’s only direct to investor mutual fund we are looking at reaching deeper into the Indian investing mass. Larger reach coupled with improved servicing capability would be our focus going ahead. We would also look at enhancing our product features to keep investing simple for the end investor.

Q: What role do you see industry associations playing in developing a more aware investor; and the regulator playing in creating a more transparent industry?
A: Industry associations and the regulator both have a significant role to play in partnership with each other. The mutual fund industry and the investor in specific look forward to this synergy of the regulator and the industry bodies to initiative activities such as investor education, introducing simple communication channels, increasing investor touch points, issuing disclosures that an investor can understand, and working towards controlling risks.

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Above article is authored by Quantum.

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