Market Insight Webinar
Welcome
- Series of monthly engagement to analyze market trends, equity valuations
- Discussion on investment strategies
- Speakers: Chief Investment Officer Vetri Subramaniam, Fund Manager Amit Prem Chandnani
Market Trends
- COVID-19 aftermath: strong profit growth for BSE 500 companies
- Companies giving cash back to shareholders instead of re-investing
- Difference from the 2004-2008 period: negative free cash flow despite profits
- Government focused on capex, private sector lagging
Foreign Direct Investment (FDI)
- Gross FDI peaked in FY22 at $85B
- Decreasing net FDI due to high disinvestment
- India's human capital strong, leading to high remittances ($106 billion in FY24)
Inclusion in Global Bond Indices
- India included in JPMorgan Emerging Market Bond Index
- Expected inflows to Indian bonds
- Potential for 5% of central government securities to be foreign-owned
Currency
- Indian rupee stable compared to other currencies
- Important to watch Chinese yuan as its weakening affects other economies
Economic Indicators
- Forecast: 7% GDP growth for FY25 (lower than government and RBI projections)
- High-frequency indicators show stable earnings expectations
Valuation Trends
- Nifty expensive on both trailing and forward P/E ratios
- Midcaps and small caps more expensive than large caps
- Sectoral view: Banking, Financial Services, and Healthcare preferred
Investment Strategy: UTI Value Fund
- Value investment strategy based on intrinsic value
- Examples of sectoral allocation due to valuation: high overweight on private sector banks
- Barbell strategy: focused on cyclicals/values and growth
- Positive tilt towards cyclical stocks
- Active management of holdings based on valuation, growth prospects
Market Cap Allocation
- Small and midcap exposure within the 18-35% range
- Conscious risk management to avoid high volatility stocks
Sector-specific Insights
- Auto and Capital Goods: cyclical nature and growth patterns
- Banking and Financial Services: valuation comforts, resilient returns
- Oil and Gas Sector: Better visibility of earnings
- Consumer Durables vs. Staples: preference for high ROCs
- IT Sector: Highly varied performances
Q&A Session Highlights
- Current account surplus and its implications for future investments
- Bank deposits vs. credit growth
- Adjustments in value fund portfolios in anticipation of market trends
Closing Remarks
- Understanding the importance of execution and ease of doing business
- Focus on fiscal discipline with upcoming budget presentations
- Encouragement for feedback to improve future webinars
Note: Mutual fund investments are subject to market risks, read all scheme-related documents carefully.