One of India’s top fund managers, Prashant Jain, ED & CIO, HDFC Mutual Fund believes that Sensex is neither expensive nor cheap and it is where it should be. He was speaking at the ninth Mutual Funds Round Table (MFRT) Conference on Saturday on a topic titled ‘Potential of Indian equities’.
Comparing the long-term growth of the Sensex with the economy, Jain says, “Though the market has been volatile for quite some time, the economy is on a structural shift. In my view, there is nothing to worry as the markets are growing just in line with the economic growth of the country.”
Jain advised IFAs to make their clients understand that the equity markets has a potential to deliver 15% CAGR over 10 years despite volatility. Advisors should set the expectation right from the beginning that equity funds can deliver better risk adjusted returns over the long term.
Giving his outlook on Indian economy, Prashant believes that Indian economy would emerge as the sixth largest economy in the world by 2020. He said that the economic growth would continue to grow at a sustainable growth rate due to the government reforms and improving macro-economic conditions. Going forward, people would buy cars as they buy mobile phones today, he says.
On the possibility of market correction, Prashant says that investors should not feel pessimistic about any market correction, as corporate earnings are yet to come.
Addressing the concerns of distributors on large cap funds as these stocks are undergoing challenges due to NPAs, US Visa and regulatory issues, Jain says that large cap companies provide a good value proposition since these companies have strong fundamental and are taking adequate measures to deal with these problems.
