The Hindu Business Line : Have a longer-term vision: Fidelity Mutual

Kolkata March 16 The shaky market should not upset investors, not if they have a longer-term vision. That just about sums up the views of Mr Sandeep Kothari, Fund Manager, Fidelity Mutual Fund.

India's growth outlook remains intact, the capex cycle is strong and the domestic consumption theme is resilient, he says, adding that financial services, industrials and consumption-related sectors merit mention.

Stocks have retracted significantly. How do you read the situation?

Assuming you are referring to the most recent phase in the market, the correction that we saw in India is in line with a marked global downtrend. As the headlines must have told you, markets across the world have been volatile in recent weeks. It has more to do with the developments in these markets than with anything else. In India, the instability seemed particularly pronounced, coming as it did in a situation that was already nervous with concerns around inflation and interest rates. In fact, we were not overly surprised to see this volatile spell because valuations had run up quite a bit.

What do you think lies ahead?

Let me talk about the short term. Valuations are now turning attractive, but I think that we will continue to see volatile conditions in the short term. The point to note, though, is that there is nothing to suggest that the current volatility has any structural implication for the domestic growth story. Indeed, we have no pointer to suggest that growth is slowing down.

So, will you ask investors to wait till the market consolidates? Or, will you want them to go ahead with allocations and not wait for the bottom to be reached?

As the classical axiom goes, it is difficult to predict volatility or to time the market. No one can do this expertly all the time. Investing, if it has to be done, must be done on the basis of a plan aimed at realising certain financial goals. And equity investing, to use another standard tenet, is for the longer term.

You cannot begin to change asset allocation for short-term gains and jeopardise your long-term investment plans. There is evidence to show that investments made in equities as an asset class outperform investments in all other asset classes over the long term. This holds true regardless of short-term volatility. So what is more important is to invest regularly and to stay invested for the long term.

Post-Budget, how will your broad allocations change?

The Budget was largely neutral, not making any directional change. The announcements regarding increased spending on infrastructure, education and agriculture are very welcome though. What is significant is that India's growth outlook remains intact. Also, the capex cycle is strong. So is the domestic consumption story.

Given that background, sectors that look encouraging are financial services and industrials (capex related). Consumption-related sectors may be also mentioned in this context. Having said that, let me add that our approach to investing is bottom-up stock-picking. We do not confine ourselves to a limited number of sectors.

The idea is to look at companies across sectors with earnings visibility and strong execution capability.

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