Latest news with #SanjayBembalkar
Economic Times
17 hours ago
- Business
- Economic Times
Sanjay Bembalkar warns against chasing story stocks
The market rally seen in the last 3-4 months has made seasoned fund managers increasingly selective about where they deploy capital. In an exclusive conversation, Sanjay Bembalkar, Head of Equity at Union AMC, shares his nuanced view on current market dynamics while issuing a pointed warning about certain sectors that have captured investor imagination but may be running ahead of their fundamental strength. ADVERTISEMENT In this chat, he lays out his preference for consumer discretionary, industrials and financials. Edited excerpts from a chat: Markets have seen a strong run in the last 3-4 months. Do you believe we are entering overvaluation territory, especially in mid and small caps? Indeed, markets have rallied in the past 3 months. However if one takes a broader view of the various market caps, midcaps and small caps have taken a breather for the last 12 months and undergone time correction. Secondly, Q4FY25 has been the 2nd consecutive quarter where mid-caps and small caps have delivered better than expectations in terms of fundamental performance. Finally, the overall valuations premium which these companies were getting have undergone correction though they have not become cheap. If we take stock of these changes, we believe midcaps and small cap companies may offer better growth than large cap companies at now corrected valuations which are making us positive on mid and small cap category from here on. Our current view is positive on large cap, mid cap and small cap categories. Amid strong macro data points and RBI bazooka, how do you see the market trajectory shaping up over the next couple of quarters? Projecting short term is always tricky. If we consider what has transpired since the Budget, tax benefits and reduction in interest rate trajectory should add a significant disposable corpus in the hands of the middle class. Whichever way this money gets spent, either it will end up in consumption or investments leading to better prospects for the economy. Government spending should be elevated considering its push for infra as well as now changed prospects for defence spending over FY26/27. Overall tariff uncertainty should subside over a period of time and should provide us clear direction on exports growth over time. As it has been well understood that India is one of the bright spots on the global economic and investment horizon, we believe, backed by fundamentals and favourable flows due to India's positioning, markets are poised for a next positive trigger to unlock value. ADVERTISEMENT How was the Q4 earnings season? Did corporate results align with market optimism? The Q4FY25 earning season was better than expectations. However, one should note that expectations were quite muted thanks to long drawn slowdown in consumption and limited pick up in capital expenditure spending. The market did not yet see true animal spirits on capex announcements. Considering uncertainty on geopolitics and tariff, markets may have to be patient and wait for 2-4 quarters before we see continuation of capex announcements gathering momentum to align with market optimism. Have you made any significant shifts in your fund positioning recently? What are you overweight or underweight on today? We have observed that once uncertainty subsides, market participants focus on earnings growth and quality of companies business. We believe if these companies are bought at a reasonable price, they have the potential to deliver superior returns to investors over time. Hence, currently we are focusing on companies with domestic businesses and clear growth prospects. In our view, such companies are available in financials, consumer discretionary, industrial and defence space. Many of these companies might be of strategic importance where we believe the government would be keen to protect these companies in unforeseen circumstances. Considering the spending: we are positive on consumer discretionary, industrials and financials. We are underweight on consumer staples, IT and energy. ADVERTISEMENT Are you holding higher cash levels as a tactical call or staying fully invested? We do not take cash calls in our open-ended schemes; we remain fully invested in funds due to our constructive view on the markets. The situation however remains dynamic due to current short-term uncertainty in geopolitics and tariffs. ADVERTISEMENT Are there any sectors you are cautious on, either due to stretched valuations or macro headwinds? We are quite cautious on narrative focused sectors which have delivered disproportionate returns and are not backed by robust fundamentals. Such sectors/themes are reminders for investors that equity is a risky asset class with non-linear return profile. There are pockets of these companies in sectors like industrials, exports space which have run ahead of fundamentals and may see time/price correction. How do you approach asset allocation in times like these? If you have Rs 10 lakh to invest, how would you divide it in between stocks, debt and gold/silver. Investors are offered 2 key asset classes by markets: 1) Efficiency assets class like fixed income, stocks which derive its worth from underlying cash flows and 2) Scarcity assets class like gold, silver, rare coins etc which derive its worth from demand and supply of these assets. Since these assets derive their value from various factors, they typically have negative correlation in their return performance. We believe investors may take benefit of this characteristic and construct a robust portfolio for long term investment goals. Our current preference is: 1) 20-25% allocation to bullion assets like gold and silver and balance can be allocated between debt and equity depending on risk appetite of the investor. If required, we recommend investors to take help of financial advisors who can guide them over a period of time. In the equity portion, we recommend entering markets over 3-6 months via systematic route due to volatility expected in the near term. ADVERTISEMENT
Time of India
19 hours ago
- Business
- Time of India
Sanjay Bembalkar warns against chasing story stocks
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel The market rally seen in the last 3-4 months has made seasoned fund managers increasingly selective about where they deploy capital. In an exclusive conversation, Sanjay Bembalkar , Head of Equity at Union AMC , shares his nuanced view on current market dynamics while issuing a pointed warning about certain sectors that have captured investor imagination but may be running ahead of their fundamental this chat, he lays out his preference for consumer discretionary , industrials and financials. Edited excerpts from a chat:Indeed, markets have rallied in the past 3 months. However if one takes a broader view of the various market caps, midcaps and small caps have taken a breather for the last 12 months and undergone time correction. Secondly, Q4FY25 has been the 2nd consecutive quarter where mid-caps and small caps have delivered better than expectations in terms of fundamental performance. Finally, the overall valuations premium which these companies were getting have undergone correction though they have not become cheap. If we take stock of these changes, we believe midcaps and small cap companies may offer better growth than large cap companies at now corrected valuations which are making us positive on mid and small cap category from here on. Our current view is positive on large cap, mid cap and small cap short term is always tricky. If we consider what has transpired since the Budget, tax benefits and reduction in interest rate trajectory should add a significant disposable corpus in the hands of the middle class. Whichever way this money gets spent, either it will end up in consumption or investments leading to better prospects for the economy. Government spending should be elevated considering its push for infra as well as now changed prospects for defence spending over FY26/27. Overall tariff uncertainty should subside over a period of time and should provide us clear direction on exports growth over time. As it has been well understood that India is one of the bright spots on the global economic and investment horizon, we believe, backed by fundamentals and favourable flows due to India's positioning, markets are poised for a next positive trigger to unlock Q4FY25 earning season was better than expectations. However, one should note that expectations were quite muted thanks to long drawn slowdown in consumption and limited pick up in capital expenditure spending. The market did not yet see true animal spirits on capex announcements. Considering uncertainty on geopolitics and tariff, markets may have to be patient and wait for 2-4 quarters before we see continuation of capex announcements gathering momentum to align with market have observed that once uncertainty subsides, market participants focus on earnings growth and quality of companies business. We believe if these companies are bought at a reasonable price, they have the potential to deliver superior returns to investors over time. Hence, currently we are focusing on companies with domestic businesses and clear growth prospects. In our view, such companies are available in financials, consumer discretionary, industrial and defence space. Many of these companies might be of strategic importance where we believe the government would be keen to protect these companies in unforeseen circumstances. Considering the spending: we are positive on consumer discretionary, industrials and financials. We are underweight on consumer staples, IT and do not take cash calls in our open-ended schemes; we remain fully invested in funds due to our constructive view on the markets. The situation however remains dynamic due to current short-term uncertainty in geopolitics and are quite cautious on narrative focused sectors which have delivered disproportionate returns and are not backed by robust fundamentals. Such sectors/themes are reminders for investors that equity is a risky asset class with non-linear return profile. There are pockets of these companies in sectors like industrials, exports space which have run ahead of fundamentals and may see time/price are offered 2 key asset classes by markets: 1) Efficiency assets class like fixed income, stocks which derive its worth from underlying cash flows and 2) Scarcity assets class like gold, silver, rare coins etc which derive its worth from demand and supply of these assets. Since these assets derive their value from various factors, they typically have negative correlation in their return performance. We believe investors may take benefit of this characteristic and construct a robust portfolio for long term investment goals. Our current preference is: 1) 20-25% allocation to bullion assets like gold and silver and balance can be allocated between debt and equity depending on risk appetite of the investor. If required, we recommend investors to take help of financial advisors who can guide them over a period of time. In the equity portion, we recommend entering markets over 3-6 months via systematic route due to volatility expected in the near term.
Reuters
23-04-2025
- Business
- Reuters
Top Indian funds bet on domestic sectors to lead market rebound amid global jitters
April 23 (Reuters) - India's top investment funds are pivoting inward, betting on the resilience of the domestic economy and a rebound in corporate earnings, while retreating from export-driven bets amid escalating global trade tensions. The NSE Nifty 50 index (.NSEI), opens new tab recovered from a tariff-driven slump earlier this month, turning positive for 2025 with a nearly 8% jump in just two weeks. However, it remains 8% below the record highs of September 27, weighed by muted earnings, record foreign outflows, and ongoing trade tensions. As global uncertainty persists, multiple fund managers said they remain cautious on sectors such as information technology, energy and commodities due to their exposure to global economic growth. Instead, fund houses are focusing capital on sectors seen as safer plays offering growth with less volatility. "We are focusing on companies with lower exposure to global trade risks, which are available in financials, consumer staples, consumer discretionary, defence and healthcare sectors," said Sanjay Bembalkar, head of equity at Union Asset Management Company, which manages $3.5 billion in assets. Financials (.NIFTYFIN), opens new tab have led the Nifty rally in 2025, rising more than 12% on expectations of further monetary easing and liquidity injections by the central bank. Consumer stocks (.NIFTYFMCG), opens new tab, hit hard earlier this year, have surged about 13% since the start of March, with fund managers expecting the government's income tax cuts and the Reserve Bank of India's rate reductions to boost demand. Consumer heavyweights such as Hindustan Unilever ( opens new tab, ITC ( opens new tab, and Nestle ( opens new tab gained between 9% and 11% since the beginning of March and were among the top gainers in benchmark indexes over the period. "Accordingly, we have increased exposure to retail, pharma, and financials over the last six months," said Shreyash Devalkar, Head – Equity at Axis Mutual Fund, which manages about $150 billion across 16 schemes. "Relatively low-growth, substantially redacted sectors might do well," he added. LARGE-CAP APPEAL India's goods exports have slowed in recent months, reflecting weaker industrial activity. Services exports have also faltered, with February and March posting declines. The ongoing U.S.-China trade war continues to heighten global economic fears, despite a temporary pause in tariffs. With markets expected to remain volatile, fund houses are preferring to stick to large-cap stocks. Small- (.NIFSMCP100), opens new tab and mid-caps (.NIFMDCP100), opens new tab have gained about 15% and 13.5%, respectively, since the beginning of March, but they are still trading 14.5% and 10% below their record high levels. "Large-caps are relatively more appealing than they were in September 2024, and opting for large-caps mutual funds is a prudent strategy," said S Naren of ICICI Prudential AMC, which manages assets worth about $210 billion. Life Insurance Corporation (LIC) Mutual Fund, managing assets worth about $5 billion, says the fund has turned more constructive on large-cap financials, capital goods, and infrastructure-linked firms. "This isn't a market where you can go all in, but it's a good time to start nibbling selectively," said co-CIO Nikhil Rungta. He noted the fund has maintained a 3%-4.5% cash buffer across portfolios to take advantage of market dips. Despite the lingering risks due to tariffs and potential global growth slowdown, India is well-positioned since it is largely a domestic-driven economy, according to Naren. ($1 = 85.4050 Indian rupees)
