Favourable demographic profile and health of banks make the medium- to long-term outlook on markets positive. Rupesh Patel, senior fund manager, equity, Nippon India Mutual Fund, who manages ₹43,000 crore assets, tells Nesil Staney earnings growth is a key variable for markets to go up. Excerpts:
What is your directional call on the market?
A favourable demographic profile and cyclical factors like health of banks and corporate balance sheets make the mediu- to long-term outlook on market direction positive. In the near term, improving earnings growth is a key variable to watch out for. We believe, given the accommodative fiscal and monetary policies, continued positive view on capex and improving outlook for demand recovery, the markets are well poised to deliver on earnings growth. This is critical, considering the fact that valuations are certainly not cheap.
Prices of most stocks have soared…
India has generally traded at relatively higher multiples due to superior longer term growth and ROE profile it offers to overseas investors in comparison to other emerging markets. Valuations are certainly not cheap compared to where we were at the beginning of 2025. However, the outlook from a medium to long term perspective remains positive.
What are your picks among large, small and midcap stocks?
We like companies in consumer discretionary categories which will benefit from expected bottoming out of demand and long term drivers like favourable demography, growth in per capita income and premiumisation playing out. We are bullish on opportunities in the power space on account of favourable demand supply and evolving mix in favour of renewables. The positive view on financials is driven by opportunities not only on the credit side, but also on businesses that benefit from financialisation of savings like insurance, asset management companies etc.
How would investors find multi-baggers?
To get a multi-bagger, one should have the mindset to remain invested for long and let the business compound. A business that has a long runway for growth, run by a competent management team, has good governance standards, is capital efficient and bought at right valuation, generally leads to superior outcomes, provided it is held long enough.
Do your funds invest in IPOs?
Yes, we invest in IPOs very selectively, primarily because most of the time valuations capture a lot of positives. We evaluate IPO companies on their business fundamentals. It is a function of their relative attractiveness on the risk-reward matrix vis-a-vis existing holdings in the fund and other opportunities available.
How much of your AUM is currently in cash?
We do not take large cash calls in the fund and remain invested in the market. We may have some cash position to account for potential redemptions or to participate in any opportunity or company-specific developments, but there is no desire to predict short-term market directions and play on it via large cash calls.
Apart from PF funds inflow, which was the biggest milestone in MF evolution?
It is the increasing acceptance of MFs as a platform by domestic investors. The MF industry’s folio count is up 5x in last 14 years. Another interesting aspect is the participation in the market through systematic investment plan (SIP) route. The industry SIP book is up from about Rs 12,000 crore in March 2022 to more than Rs 26,000 crore in April 2025.
What influences management quality in your due diligence?
We look at management quality from governance and competence perspective. Assessment of past capital allocation decisions, structure of balance sheet and related party transactions are some of the factors we take into account to develop our view on management quality.
What are the stock selection criteria?
As a fund house, we focus on constructing portfolios based on our bottom up in-house research. A process oriented approach, diversified portfolios, focus on bottom up stock selection and being mindful of valuations are some of the principles, we follow in our investment approach.