ETMarkets Fund Manager Talk: Shun daily market fluctuation, investments in India will yield rich returns: Ram Kalyan, Jama Wealth

How do you expect equities as an asset class to perform over the next 2-3 months? What are the major downside risks?
Speculating on short-term equity market performance is not advisable. Daily market fluctuations can be influenced by various news and information, and it can be challenging to discern whether such news will have a positive or negative impact on the market.

Our perspective is that the market will likely remain range-bound with a negative bias due to the global economic situation. We do not anticipate a significant rally unless there is a significant influx of investment and a significant increase in liquidity.

The SVB crisis has become the talk of the town. Do you see any impact of this on India or the Indian banking system?
It is uncommon for a central bank to cease the banking operations of a large institution like SVB, which was the 16th largest US Bank.

However, such events can have a significant impact on global markets due to the exaggerated, incomplete, and sensationalised news coverage that typically accompanies them.

These occurrences tend to exploit people’s emotions of greed and fear, providing opportunities for traders. Nevertheless, they can be beneficial in the long run as they expose weaknesses in the system and test our resilience.

Our perspective is that the Indian banking system is sturdy and well-regulated, and the SVB crisis is unlikely to have a significant impact on either India or its banking sector, although there may be some market drama.
The Nifty 50 is currently trading at 20x its trailing valuations for FY23. Which sectors or pockets look attractive and offer buying opportunities?
Our model does not take only P/E as the primary factor into account, so we cannot provide sector-specific advice. The market as a whole appears attractive from a Nifty P/E perspective, though there is still a possibility of a downturn. It is advisable to focus on individual stocks rather than basing investment decisions solely on sectoral P/E ratios.

Which are the sectors you are extremely bullish on over the next 1-2 years, and which ones are you bearish on? Could you also explain the reasons?
Sectors that glue into the Indian consumption and manufacturing trend are likely to do well. Midcap manufacturing companies that cater to Indian businesses will see a good run as the Indian economy grows.

We have seen that both SEBI and exchanges have been cautioning investors on fraud and dubious practices on investment advisory by some entities. What is your readthrough and how should retail investors handle such instances?
SEBI has been doing a fantastic job of protecting investors from fraudulent practices. As Corporate Risk Investment Advisors or RIAs and with an in-house PMS now, we need to comply with so many regulations. We understand that this is in the larger interests of the client.

Exchanges are also self-regulatory organisations that put in place so many checks that retail investors are not taken for a ride.

There is no substitute for individual due diligence and there is no regulation that can protect you against your own greed. Most instances of fraud happen where the targeted victim is lured with a scheme that promises big money in a short period. Investors need to be cautious about such schemes.

Risk is the shadow of return. Sometimes, we may not be able to see it, but where there is a return, there is a proportionate risk.

SEBI or any other regulator cannot do much when an investor blindly walks into a trap.

Of course, there is stringent punitive action on RIAs which is a good deterrent, but that does not stop people who are not even RIAs, from offering dubious advice.

One thing SEBI can probably do is to increase investor awareness about RIAs, as distinguished from any person masquerading as an investment advisor.

As we enter a new financial year, how do you expect it to pan out for markets and what kind of portfolio allocation will you recommend to retail investors?
We continue to be long-term bullish on India. This is India’s decade and we will see our investments in India yield rich returns. Anyone who is not invested in Indian equities is likely to miss out big time. Asset allocation across asset classes is key for any investor.

The money allocated to equity must stay in equity until its objective is fulfilled. This is specific to each investor and we do not have an all-purpose allocation model.

We abide by our “Roots and Wings” philosophy and companies that meet our criteria are considered. We do look at the sectoral outlook for that particular stock at that particular time, to further fine-tune our picks.

SIP inflows eased last month after hitting record highs month after month till January. Do you think retail investors are losing their patience over market returns?
The dip in SIP inflows from January to February is just about 2% and this is an annual future. This is probably because some SIPs complete their tenure. Some SIPs get discontinued because money needs to be diverted to tax-saving products. This does not indicate retail investors losing patience. We really need to wait till May data is available because that is when SIP inflows normally shoot up.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)