❝We expect market to correct or remain flattish in second half of FY18❞
- PVK Mohan, Head Equities , Principal PNB Asset Management Company
What can you make of the recent market correction? Have markets corrected enough?
Against the backdrop of the challenging geopolitical situation, Q1FY18 results, which were slightly below expectations, and valuations above the long term trend, we believe the Indian markets could correct a little more.
What are the challenges faced by fund manager to beat the benchmark index? How confident are you in beating the benchmark indices in coming years?
It is difficult to predict future performance, but our funds have consistently beaten their benchmarks over the last several years and it is our endeavour to do so in future too. The key challenge in beating the benchmark index in the current market scenario is due to the fact that stocks have been correcting but the index has not fallen correspondingly; each time different stock/sector helps curtail the downside in index and it is difficult to keep changing the portfolio frequently in tune with the short term market trends
What is your outlook on earnings in coming quarters and how would you view the Q1FY18 results in particular? Any scope for earnings upgrade?
As highlighted earlier, the results for Q1FY18 were tepid and slightly lower than expectations in part due to uncertainty ahead of GST. We expect the results in subsequent quarters to improve, more so in the second half of FY18 which would be aided by demand pick-up and low base of H2FY17. The prospects of earnings upgrade is expected be better in the second half of FY18
What kind of returns can one expect by investing in equity diversified mutual fund over three to five years?
We believe returns from equity markets could be around low teens over the next 3-5 years In which sectors do you see value in markets? We continue to believe that there are greater opportunities in the domesticoriented sectors and selective opportunities in the export-oriented/ global sectors. Some of these include sectors such as auto/auto ancillaries, cement, finance and construction.
The first half of this year was good for equity markets. Will second half mimic first half's performance? What are the key factors to watch out for in the second half?
It would be difficult to replicate the performance of H1CY18 in the second half. We expect the market to correct or probably remain flattish for the second half, although there could be periodic bursts of rallies and corrections. The key factors to watch out for would be demand environment post-gst implementation, geopolitical environment, results for the remainder of FY18 and interest rate outlook globally and locally.