Mr. Sumit Bhatnagar
Head Equity Funds - Indiabulls AMC
Mr. Sumit Bhatnagar has over 14 years of experience in Banking & Capital Markets. At Indiabulls Mutual Fund, Sumit played a pivotal role in setting up the AMC systems & processes and in framing business strategy, designing business plan and products for the AMC. He is extensively research oriented and follows a Top Down approach for Large Caps and Bottom Up approach for Mid / Small Cap. He is well versed with Indian and Global Macros. Earlier, he worked with SEBI for five years in Investment Management Department, handing critical policy matters pertaining to mutual funds and contributed extensively in various high powered committees of SEBI. He holds an MBA (Investment Management) from the University of Toronto, Canada and is also a CFA (USA).
Q. How do you assess the current markets? How are you approaching market right now?
Answer: Over short term we expect the markets to be volatile & choppy due to combination of domestic & global factors. On the domestic front, concerns around strong oil prices, its impact on twin deficits, rupee depreciation, interest rates etc. are emerging as a overhang. This coupled with upcoming state and union elections can lead to volatility in the markets. Also in global economy, while growth remains robust, US – China trade disputes and fears of emerging market contagion can trigger a risk off. Hence, we are cautious over short term.
Q. What is your investment strategy? What sector or stock specific approach do you follow while constructing your portfolio?
Answer: We primarily use a combination of top-down and bottom-up approach for constructing the portfolio. identify key themes/sectors to play based on multiple factors like global macros, domestic macros, economic cycle, business cycle, government policies, population demographics etc. For stock selection, we look at quality and pedigree of management, assess the quality of business, robustness of business models etc. Multiple factors like growth potential, moat, pricing power, market leadership, capital allocation policy along with detailed fundamental analysis and valuation range are looked at for including stocks in the portfolio.
Q. What kind of stocks and sectors is the fund house currently avoiding and why?
Answer: We are underweight on BFSI due to rising interest rate environment and NPA related issues. Also we have turned underweight on sectors affected by rising crude prices and have also booked some profits in consumption space selectively, where valuations are looking stretched.
Q. Given the economic and political situation existing today and till next general elections, what would you advice investors?
Answer: Since we are positive on the markets from 3 year perspective and expect decent earnings growth, we suggest participating through SIP & STP route at the moment. Lump-sum investments can wait for better entry levels.
Q. Rising crude prices, falling rupee and inflation - do these factors worry you? How have these factors impacted your investment decisions?
Answer: A falling rupee and rising oil prices can become a head wind for the market as they impact the ‘Twin deficits’ & fuel inflationary expectations. We have been underweight on BFSI space for quite some time and have trimmed our exposure to crude oil related sectors over last few months.
Q. What is your future outlook for the market? What would be the key drivers for the markets from here?
Answer: Medium to long term outlook for Indian equities looks fairly robust. From a three year perspective, with robust domestic consumption, starting of capex cycle, stable exports, and improving GST compliances, we expect strong 7%+ GDP growth and fairly robust 12 – 15% cagr earnings growth, which makes equity investment fairly attractive. Over long term, with Indian economy expected to be $ 5 trillion economy in next 7-8 years and $ 10 trillion economy in next 15 years, outlook for equities looks fairly robust.