FRANCHISE TRADE NOW OPEN AN ACCOUNT GLOBE E-KYC
Fund Managers Interview
Prev Next
Demonitisation has stalled the uptick in consumption cycle
31-Jan-2017 (13:21)

Mr. Nilesh Shetty
In an interview with Anjali Raulgaonkar from Capital Market Publishers, Nilesh Shetty, Associate Fund Manager-Equity, Quantum AMC, said, One can expect some announcements to kick start the consumption cycle including possible rejig in tax slabs or increase in deductions to leave more purchasing power with the tax payers.

Excerpts:

1) What will the key driving factors for markets going ahead? How are your funds positioned in the current market conditions?

Demonitisation has stalled the uptick in consumption cycle. Private Capex remains weak. Revival of both will be keen watched. Corporate earnings have remained weak for the last three years we remain slightly cautious of the near-term macro and believe there could be downside risks to GDP estimate. The fund strategy remains stock specific and we continue to focus on the managements building the businesses for the long term.

2) What are your expectations from Union Budget 2017-18?

Consumer discretionary spend had collapsed post Demonitisation and still remains below normal. One can expect some announcements to kick start the consumption cycle including possible rejig in tax slabs or increase in deductions to leave more purchasing power with the tax payers. Rural India was particularly badly hit after Demonitisation and one can expect some measures specifically targeted to address rural discontent. Relaxation of FRBM norms is likely to kick start the consumption cycle.

A series of important state elections are scheduled after the budget. There is a risk that the Government may resort to populist policies to garner votes. Any significant populist tilt with weak economic basis may not be perceived favorably. In addition, one of the commitments of the BJP government pre-polls has been to simplify the tax structure as well as administration. However very little has been seen so far. One hopes some movement towards simplifying the tax structure is observed. Timelines for Implementation of GST will be keenly watched

3) Has the change in government proved beneficial to economy so far? How?

There is very little evidence of corruption at the top level which is the biggest positive of this government which remains the biggest positive of this government. There has been some evidence of simplification of laws but by and large a lot needs to be done

4) How do you perceive the government's demonetization move? What are negative and positive implications?

Demonitisation has been a very poorly conceived and executed plan. Looking at the economic costs involved with loss of productivity, lower revenues, loss of taxes, and stalling of the consumption cycle, the payoffs could never justify whatever the government was trying to achieve in terms of targeting black money. One may see some reversal of underreporting by the informal sector but by and large the negatives still far outweigh the positives.

5) What are the essential traits for the stocks to be in your portfolio?

We follow a value style of investing. Our strategy remains to buy good stocks at reasonable valuations to generate sustainable long term returns. We are purely bottom up stock pickers and just focus on long term fundamentals while trying to value companies. We have a predetermined Buy and Sell limit for each stock actively covered by our research team. The limits are decided based on sustainable cash flow generating ability of a company and its long term valuation bands. Once a stock hits our buy limit it finds its way into our portfolio and once it hits our sell limit it exits our portfolio.

6) How are the market positioned to face global clues? Share your views on global economies and their impact on India?

Global events like Brexit and Trump Winning the US elections are indicators that we may over the next few years see a world which is a lot more insular and protectionist in policymaking. One may also see economic costs being imposed on businesses which thrive on the free movement of goods and labour. Fortunately for India it still remains a domestic story driven by the Indian consumer. India should be one of the least impacted countries if there are significant barriers imposed on global trade.

7) Is India still an attractive investment destination?

India remains a long term structural story. We have some great companies run by excellent managements who are building businesses for the long term. Near term there might be some issues with weak corporate performance but we believe over the next five years there could be decent upside from current levels. We believe Indian equities as an asset class will continue to draw long term patient capital from abroad.

8) Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

We have a stock specific strategy and are sector agnostic. Currently consumer discretionary led by two wheelers have larger weight in the portfolio followed by power and gas utilities purely due to attractive valuations. We do not have any allocation to consumer staples purely due to expensive valuations. Companies with weak corporate governance and a history of treating minority shareholders poorly do not come into our portfolio.

9) How often do you re-balance your equity allocation?

We are never in a hurry to re-balance or keep changing our portfolio. Our strategy is to buy good companies at comfortable valuations and wait patiently for value to emerge. We sell only when the stock becomes expensive and hits our sell limit. Ignoring market froth has allowed us to generate steady returns over the long term. We don't mind holding on a company for long time. The best investors have held good companies over decades to generate superior returns.

10) Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

We are a boring long only value fund. We tend to have very low churn. We focus on individual companies and any stock if its hits our Buy limit will be part of the portfolio irrespective of market levels. Similarly, we exit companies if they hit our sell limit irrespective of market levels. We do take any view on markets and avoid making portfolio changes based on the same.

11) What would you like to advice to the investors in the current scenario? What strategy would you suggest the investor to adopt at this point of time in the market?

Near term there could be some turbulence related to rising inflation and weak corporate performance. However, India is a long term structural story, hence any significant correction should be used a great buying opportunity. Timing the market is tough hence a sustained allocation to equities via SIP is best advised.

We expect inflation to undershoot RBI's target of 5% by March 2017
09-Dec-2016 (17:30)
In the medium to long term, the Indian equity market will be primarily swayed by the trajectory of earnings growth
08-Dec-2016 (16:41)
Potential increase in house rent allowances and GST implementation could push headline inflation above the RBI's 4%+/-2% target in 2017
03-Oct-2016 (16:00)
We would therefore advise investors to continue to invest systematically in Indian equities and use any volatility caused by global factors to their a
28-Sep-2016 (18:36)
We expect the bond yields to come down by further 15-20 bps over the next 6 months
17-Aug-2016 (14:33)
We are running a maturity of 13 to 14 years in our Quantum Dynamic Bond Fund as we expect easy liquidity and cut in repo rates in the coming months
26-Jul-2016 (14:42)
Currently, we are in an environment where global outlook is marred with uncertainty but there is a clear pick up in the domestic economy
07-Jul-2016 (10:33)
We expect 10-year benchmark sovereign bond to trade in range of 7.25%-7.50% in near term and eventually stabilise in 7.15% - 7.35% by end of financial
25-May-2016 (16:39)
Macro strength, fiscal prudence, inflation control and easing space make the case for India to clearly stand out amongst its Emerging market pack
06-Apr-2016 (14:28)
Going forward factors like inflation, monsoon, FPI flows and currency markets will be in the spot light for further clue on domestic interest rates
04-Apr-2016 (12:08)
It would be important for the government to signal how it intends to boost the economy without compromising on fiscal consolidation
08-Feb-2016 (15:47)
In midterm we feel there will be scope for RBI to ease further as inflation -growth dynamics remains in favor
01-Jan-2016 (14:49)
The government's intention is very clear in its reform efforts and going forward, we are likely to see this translate into more quality spends
31-Dec-2015 (14:15)
Connect with us :   
Globe
About us
Our Services
Milestones
Memberships
Core Values
Investor Relations
Product & Services
Broking
Institutional Broking
PMS
Clearing Services
Distribution
Research
Depository
Trade & Products
Globe Connect Pro
Globe Trade Smart
Globe Connect Mobile/Tablet
Globe News Connect
Back Office
Back Office
CMS
CMS-TM
KYC/KDC Status
Mutual Fund
CAMS
RMS Policy
Helpdesk
Download Forms
Useful Links
BSE
NSE
SEBI
RBI
MCX
NCDEX
Exchange Holidays
Policies, Procedures, Rights, Obligations and RDD
Guidance Note on FATCA and CRS May 2016
Right and Obligation, RDD, Guidance Note in Vernacular Language
In case of any grievances pleae write to
Investor_trading@globecapital.com /  igr@globecapital.com (For Trading)     globedp@globecapital.com (For DP)    Investor_pms@globecapital.com (For PMS)     
commigr@globecapital.com (For Commodities)
SEBI Regn. No. NSE.:INB/INF/INE 230663732, TM No.:06637, Clearing No.- M50302 | SEBI Regn. No. BSE.:INB/INF/INE 010663731, Clearing No.- 3179 | SEBI Regn No. MSEI :INB/F 260663738, INE 260663732, TM Code-1004, Clearing Member Code- 4 | USE SEBI Regn no. - INE 270663732 , CM code: 06637 | SEBI Regn for DP : IN-DP-NSDL-97-99, NSDL- DP ID: IN300966, CDSL DP ID: 12020600 | Research Analysts Regn No. INH100001187 | PMS Regn No. INP000002361
* Through subsidiary Globe Commodities Ltd. --> Commodity Membership No.: NCDEX- FMC Regn. No. NCDEX/TCM/CORP/0004, TM Code-00012 | MCX- FMC Regn. No. MCX/TCM/CORP/0628, CM Code-8550 | ICEX- FMC Regn. No. ICEX/TCM/CORP/0011, TM Code- 1009 | NMCE- FMC Regn. No. NMCE/TCM/CORP/0018, TM Code-CL0111 | ACE - FMC Registration no.- ACEL/TCM/CORP/0163, TM code- 4001 | UCX FMC Regn. No.: UCX/TCM?CORP/0014, TM Code- 10014 | NCDEX Spot Exchange Membership no.- NCDEXSPOT-CR-07-10011
** Through step in subsidiary Globe Comex International DMCC --> DGCX **TM Id.1064, CM Id.3064*
"We also do Pro-Account trading in Commodity Segment.."
"KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary."
Attention Investors:
"Prevent Unauthorised transactions in your account --> Update your mobile numbers/email IDs with your Stock Brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day .......... Issued in the interest of investors"
"Prevent Unauthorized Transactions in your demat account --> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from NSDL/CDSL on the same day......................issued in the interest of investors."
"No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
© 2013 Globe Capital Market Limited. All rights reserved
Designed, Developed and Content powered by C-MOTS Infotech (ISO 9001:2008 Certified) Privacy Policy Disclaimer Terms and Conditions