‘Foreign investor inflows are the biggest concern for the Indian market’

Font Size

Print

Feedback

Email

Discuss

Related Articles

Gold the most preferred investment

: The markets have been choppy all of this week. To get an insight on the current valuations for the Indian market, Teena Jain of The Financial Express talks to NK Garg, CIO of Sahara Mutual Fund. The fund has a total corpus of Rs 25,421.12 crore. Excerpts:

What is your take on the current valuations for the Indian market?

It is not fair to talk about the index. The right approach is to pull up companies that are fundamentally-sound and have the potential to scale up their operations further. Out of every 200 stocks, you can still find 60-70 undervalued stocks in the Indian market. We choose stocks on fundamental analysis basis rather than the movement of the index.

Moreover, after WTO initiatives, Indian companies are undergoing structural changes. The organisation has brought wonders for the Indian companies which were earlier uncertain on their competence against the global companies.

The recent domestic export growth clearly reflects the growth of Indian companies vis-a-vis global peers. Incidentally, Indian companies are also going through cost reduction phase, which MNCs like HLL, Nestle and Cadbury have already gone through during 2000-2001.

On the whole, considering stable FDI growth and the fact that capital markets are now more open to fund-raising, I do not consider the Indian markets as overvalued.

What could be the possible threats for Indian market from hereon?

At present, FII inflows are the biggest concern for the Indian market. Markets could tumble down the moment they stop coming. Secondly, in an ideal market, futures market follows the cash market. But the situation is vice versa in India. Other than this, Impac cost is high that needs to be lowered down.

Is this the right time for investors to follow defensive strategy?

I define defensive strategy as pulling up stocks that have good upside potential and low downside risk. This is the kind of strategy that is ideal for every market irrespective of the index figures. I will not advise investors to get wary of the index figures and start looking for non-cyclical stocks. Rather they should take a call on companies with sound fundamentals and valuations. This is the best defensive strategy one can follow in any market.

What is the strategy of Sahara Mutual Fund?

Currently, Sahara Mutual Fund has five equity funds and the strategy depends on the objective of the scheme. We follow value-driven approach that calls for identifying fundamentally-strong companies.