Fund managers say that the recent correction in markets was due to global factors and the fundamentals of Indian economy remain intact.
The 538 point drop in Sensex yesterday sent jitters in the markets. The BSE Sensex fell from 27,319 to end at 26,781 in yesterday’s trading session due to a combination of factors like sell off by FIIs, widening trade deficit, rupee depreciation and weakness in global markets. Even today, the Sensex ended 0.27% down at 26,710.
We asked leading fund managers what is their advice to investors at this juncture.
S Naren, Chief Investment Officer, ICICI Prudential Mutual Fund feels that there is no reason to worry as the fundamentals of Indian economy remain intact. “Indian markets got battered due to external factors. The fall in crude oil price is positive for India but it will not help markets overnight as oil marketing companies are hurt. It will take some time for the decline in crude oil price to play out. The rupee has been the most stable currency in the world. The recent correction has nothing to do with India”
“Countries such as Russia and Australia which are driven by commodity prices will be affected. I don’t see any reason for a selloff in the Indian market as the fundamentals of Indian economy remain intact. The fall in crude price is good for our markets,” says Rajeev Thakkar, Chief Investment Officer & Director, PPFAS Mutual Fund.
So, will a rate cut from RBI bring relief to markets? “I think a 25 basis points cut won’t help in a big way. The rate cuts have to be substantial for it to make any meaningful difference to companies,” says Naren.
Most fund managers say that any correction in the market is a good time to enter the market. “Indian equities are good for the long term. Investors should remain invested through SIPs,” advises Naren.
“Investors should stick to their goals and continue investing through SIPs. They should not get carried away by such events,” says Rajeev.
Neelesh Surana, Head - Equity, Mirae Asset Mutual Fund feels that any correction is a good time to enter the market. “Volatility will remain in the market globally. The correction in Indian markets was due to global factors. India is in a better position compared to other emerging economies. Market participants were expecting a correction. I don’t see any major correction happening in the market. Fall in crude price, lower inflation and rate cuts will be beneficial for Indian markets. I think those who were underweight on equities should enter the market at every dip.”
With the crude oil dropping below $ 59 a barrel, fund managers say it’s a big positive for Indian markets. Also, fund managers say that easing inflation and a subsequent rate cut would help housing finance, automobile and other companies which are leveraged.
While global factors might affect Indian markets in the short run, fund managers remain bullish on the prospects of Indian economy.
