After flooding domestic markets with funds for 10 of the 12 months of this fiscal year, Foreign Institutional Investors (FII) have slowed the quantum of inflows this month. Could this pose a challenge for Dalal Street and could FIIs turn net sellers in 2021? V Srivatsa, Executive Vice President & Fund Manager –Equity, UTI Mutual Fund, does not believe so. In an interview with Kshitij Bhargava of TheSpuzz Online, the fund manager stated that India continues to be in concentrate amongst emerging markets for most FII even though he ruled out any important promoting by FIIs. Here are the edited excerpts.
Are you concerned about Foreign Investors pulling out the revenue they have invested in India this fiscal year?
FII pulling out may well be quick term effects, nevertheless, the markets have learnt to live with this volatility more than the longer term and do not see any purpose to be concerned about this. India continues to be in concentrate amongst emerging markets for most FIIs, even though they could play tactical trades, more than the longer time we do not see a important influence of any sell down.
A lot has been stated about Midcap and Smallcap stocks how do you really feel about them? Is there an chance right here?
A year back, the nifty mid-cap index was quoting at about 20% discount to the nifty 50 index which has now converted to a premium of about 10% offered the sharp outperformance of the mid-cap stocks. This has occurred as final year we have been in the midst of the covid crisis and sentiments and liquidity was poor which reflected in the discount of the mid-cap index to the nifty 50. While the transform in the financial outlook has led to the premium reverting to the heights seen in FY18. We do see the premium sustaining on the back of a sturdy recovery in the economy which would lead to superior earnings surprises in the mid-cap stocks.
In the case of increasing bond yields, do you believe investors could switch from largecaps in such a situation?
As stated earlier, there does not look to be any relative attractiveness of mid-cap as a class to outperform the huge-cap on a valuation basis, nevertheless, there could be stock distinct or sector-distinct possibilities that can be capitalized upon.
We have a lot of activity in term of IPOs lately. Do you believe this has had any impact on liquidity in the industry?
The rise in the markets is usually accompanied by a slew of public troubles as corporations attempt to money on the increasing markets. However, we do not see any mega-sized concern which can suck away liquidity and also the existing troubles are from the new age industries which will broaden the markets and positive for the lengthy term.
Nifty Pharma is down 10% from the middle of January, is a superior adequate correction to get back into pharma stocks?
We continue to be positive on the pharma sector as the longer-term development prospects stay extremely superior and even though the valuation has rerated from the lows final year, they nevertheless continue to be affordable with respect to the development prospects and higher-high-quality company that this sector provides. The sector has come from a period of discomfort in each domestic and export markets and we see a reversion to lengthy term development in each segments.
What space are you most bullish on for the upcoming fiscal year?
We stay positive on the domestic financial recovery and think that capital goods, infrastructure, true estate, corporate-oriented banks and automobiles offer you extremely proxy to play this theme.