DSP Blackrock Mutual Fund expects that corporate earnings will grow at 21% over the next two financial years. The fund house made this statement at a press conference held on the completion of 20 years of DSP BlackRock Equity Fund and DSP BlackRock Bond Fund.
Sharing the rationale behind higher growth expectation in earnings, Anup Maheshwari, Head–Equity, at DSP BlackRock Mutual Fund, says, “India is well placed on growth and liquidity. Macro conditions are improving, the entrepreneurial environment is positive, and there is good value creation potential in a host of businesses. We believe that equities will continue to be an asset of choice over the next decade.”
Another factor that would help boost earnings growth is the interest rate scenario. He says that banks are yet to pass on the benefits of rate cut of 175 bps to the system. This has started to happen with RBI’s intervention, he adds.
On the all-time high rally in Sensex and Nifty, Anup is of the view that it is just a number. He believes that the valuation of a few stocks is yet to reach its peak. He expects that the rally in the markets will continue due to adequate liquidity and recovery in demand.
On the fixed income, Pankaj Sharma, Head of Fixed Income, at DSP BlackRock Mutual Fund, believes that foreign flows in the debt market will be subdued. “Global ratings agencies downgraded India which may affect foreign flows in long-term bonds,” he said.
Talking about average maturity on debt portfolio of the fund house, Pankaj says, “The last one year has been quite eventful for the bond market, but in the current market environment, fixed income schemes, having average maturity between 1-3 years, would benefit the most as the segment would have better accrual and limited risk during the holding period. We expect yield curve to steepen because of lower investor appetite for the longer duration bonds. Short end of the curve offers good accrual in the current scenario in a surplus liquidity environment where RBI is expected to remain on a pause for a considerable period.”
