 |
| Mr. Nimesh Shah |
- Mr. Nimesh Shah, MD & CEO, ICICI Prudential AMC
As we head into 2012, the biggest difference is going to be a move away from worries on inflation and towards worries on growth sustenance.
Lower Worries on Inflation..!
The year 2012 particularly in the first half of the year is expected to be marked by completely lower worries on inflation due to the advantages of very good monsoons and as a result of the tightening of interest rates and slowing down of the economy. We are therefore expect to move towards worries on growth whereby 8% growth which was a norm in India in the recent past is no more a given and is going to come only by way of increased focus in infrastructure development and a reducing fiscal deficit scenario.
Consequently we believe that the Reserve Bank of India (RBI) will be better positioned towards a more pro growth stance than witnessed throughout 2011 which will be very good for the economy.
Small -Mid Cap Stocks..!
In line with this, the stock market is also expected to be more concerned on growth triggers and lesser on inflation. From a valuation perspective, small and mid cap stocks are very attractively valued with better upside potential. This segment therefore clearly represents an opportunity for investment and can potentially provide superiors long term risk adjusted returns to investors.
In the case of large caps, the valuations have corrected and are reasonably valued. However, a substantial increase in value of large cap stocks would require a very positive growth environment or a scenario where the interest rates in the economy come down significantly.
Today as biggest challenge for the Indian economy is the infrastructure bottleneck which is becoming increasingly imperative for the sustenance of growth. We would therefore benefit from increased focus on investment in infrastructure by utilizing revenue received through effective taxation, disinvestment, which will be a very significant positive for the economy. There is also a serious necessity to start a trend towards investing by corporates particularly by the cash rich companies belonging to top business houses of the country.
As we are at the anvil of the new year, 2012 the whole Indian investors have been under-invested in equities in 2007 and have a very low share of their asset pie. At a time when small & mid caps are attractively valued and large caps are fairly valued.
Real Estate..!
In contrast, physical real estate in certain parts of the country are very expensive and have come to be a significant part of the investors portfolio. With the current prevalent environment for inflation, we do believe that the RBI will move to scenario of pro growth rather than tightening approach on 2007 thereby presenting and environment favorable for long term investment in equity.
Our advice to investors is that when we see actual interest rates fall in the economy, or acceleration in growth rate in the economy, investors should aggressively increase their weightage towards equity. This apart 2012 will also continue to have volatility as the primary theme. The view remains that investors need to provide for greater volatility in their equity investment strategy.
ICICI Prudential Volatility Advantage Fund..!
Rather than being wary of volatility, investors should capitalize on this to increase return potential. In such a scenario of expected volatility, investors can benefit from investing in funds that have the potential to capitalize on volatility like the ICICI Prudential Volatility Advantage Fund & value investment oriented funds like the ICICI Prudential Discovery Fund which have the ability to straddle across market caps / sectors and asset classes. This apart the common mantras regularly enforced of Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and asset allocation should continue to form the basis of retail investment philosophy.
No comments:
Post a Comment