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What is your medium-term outlook on Indian equity markets?
India is currently enjoying the confluence of the macro and micro tailwinds with 7% GDP growth, moderating inflation prints, range-bound crude prices, easing 10-year G-sec yield, stable currency and resilient corporate earnings. Earnings growth trajectory, capex, policy initiatives like production linked incentives, Lok Sabha election outcome and the timing and quantum of interest rate easing globally, will be monitorable for sustained valuations and market growth. In this backdrop, we remain positive on the medium-to-long-term outlook on Indian equity markets.
How comfortable are you with the valuation across market capitalization?
Nifty is trading at a 12-month forward P/E ratio, which is at a premium to its long-term average, as is the NSE Midcap 100 index. There could be instances where companies operating in the same sector may end up reporting a diverse set of financial results. Hence, we believe that the investment environment going forward would be a ‘stock picker’s market’ and our approach in such an environment would revolve around the thesis to identify companies on the basis of ‘bottom up’ approach.
Multicap funds are similar to flexicap funds and ELSS. What additional benefits can investors get by investing in multi cap funds that are not possible with flexicap and ELSS?
Multicap funds invest across market caps as per the SEBI mandate. Minimum 25% of the assets are to be allocated each to large cap, midcap & small cap while remaining 25% are dynamically managed by the fund manager based upon the market scenario. These funds are suited for investors who wish to lower the market cap allocation based risk within the portfolio by having a minimum prescribed allocation, a feature which is not mandatory for flexi cap and ELSS schemes.
AMFI data shows that ITI Multi Cap Fund has not outperformed its benchmark in 3-year period ending in March 2024. How do you plan to regain its performance momentum?
The current fund managers have been managing the scheme from August 2022 and have ensured that the scheme has been outperforming the benchmark in that time frame. Steps taken to ensure an improved performance include identifying sectors with emerging themes or expected tailwinds, identifying stocks on a bottom-up basis based upon growth drivers, business quality, promoter pedigree, intrinsic value and margin safety.
What makes ITI Multi Cap Fund different from other multi cap funds?
In addition to the above mentioned stock selection strategies, ITI Multi cap fund aims to capture opportunities across growth, value and turnaround companies without professing any style bias. The focus as mentioned previously remains on bottom-up stock selection and in generation of alpha.
Value Research data shows that the fund has high exposure to large cap stocks. What’s the reason?
The allocation to large cap stocks remains in line with the multi-cap mandate as defined by SEBI and tactical allocation bets within market caps would be taken from time to time.
What is the reason for higher allocation to financials and capital goods sectors?
Capital goods includes sub-sectors like electrical equipment, plant equipment, and earthmoving/ mining machinery, heavy electric equipment's etc. that would be benefitting from govt’s higher infra push and schemes like PLI and hence form a long-term structural bet. Even the financial sector has significant scope of growth through market penetration and digitization makes it possible, along with expansion of ancillary financial services activities.
Disclaimer - The views expressed are purely personal in nature. The statements herein may include future expectations and other forward-looking statements that are based on our current views and scenarios. The information herein alone is not sufficient and shouldn’t be used for development of an investment strategy or construed as investment advice. Please consult your financial advisor before investing.
Mutual Fund investments are subject to market risk. Please read all scheme related documents carefully.
