Vinay Kulkarni, Senior Fund Manager, HDFC Mutual Fund shares his perspective on markets and the state of the economy with Cafemutual.
What is your reading of the current situation at a time when
Indian economy is facing so many challenges?
Over the last three years, we have seen the GDP growth rate decline from close to nine percent to below five percent in the last quarter. This should be viewed as a cyclical slowdown and not a structural one. The long term factors which should help the economy grow fast, such as a young population (which will earn more, save more and consume more) and growing rates of consumption and investment (both infrastructure as well as corporate capex) are still intact.
What is your outlook on the Indian economy? Near-term, medium term?
In the near term, the Indian economy will see the lagged impact of slower decision making in terms of government policies as well as the impact of large infrastructure projects stuck in red tape. However, in the medium term, growth should pick up which will be led by export oriented sectors as well as domestic manufacturing sector.
As a fund manager, how have you had to recalibrate your strategy/portfolio composition as a response to these changes?
I have increased exposure to IT sector in the period prior to Quarter June 2013 results. Stock prices have moved up since then. I remain overweight on domestic cyclical and rate sensitive companies. This is driven by my view that the worst seems to be factored into prices of banks and capital goods companies.
What themes do you see playing out well?
For the next three years, banks are expected to outperform the broad market. IT sector is expected to do well over next one to two year time frame.
What is your view on the small and mid-cap stock which have been battered badly? Is it a good time to accumulate these stocks? Within the mid-cap space, which sectors are you optimistic about?
Mid cap stock price movements are sector agnostic and more dependent on individual stock specific growth rates and valuation. I do not think one should take a sector approach to mid-cap investing.
How are you managing risk to ensure that your funds are insulated?
We follow risk management processes which ensure that stock specific exposure, sector specific exposure as well as co-related sectoral exposure is restricted within certain limits.
Your advice to investors
Invest with a long term perspective and have a particular goal in mind. When your investment goals are met, you need to reassess your goals afresh. Always try to have a good understanding of your risk taking ability as well. Before you make any new investment, try to think of both your investment goals as well as your risk taking ability.
If not a fund manager you would have been…
A software engineer. I started my career as one.
Vinay Kulkarni manages HDFC Core & Satellite Fund, HDFC Premier Multi Cap Fund, HDFC Index Fund, HDFC Tax Saver Fund, HDFC MF MIP Short Term Plan and HDFC Multiple Yield Fund.
