‘Stick to periodic investment and maintain discipline’

Recapitalisation of public sector banks, reduction in competitive intensity in telecom space, better-than-expected corporate results, improved ranking in ‘Ease of doing business’ and the ongoing GST reforms are some of the catalysts that have triggered the recent rally in the stock markets, Harshad Patil, Chief Investment Officer, Tata AIA Life Insurance Company, said.

The resolution of the NPA problem and the Bharatmala project for roads which will help create infrastructure and help revive credit growth augur well for the banking sector, he said. Harshad, however, clarified that as an investment strategy, they were still not bullish on public sector banks and the focus would be on private sector banks and NBFCs with retail focus.

Asked about expensive valuations, Harshad said markets were expensive everywhere in the world but those investors who invested with a long-term focus would benefit. He reiterated the advice that value is created by the power of compounding rather than timing the market and urged investors to stick to periodic investment, maintain discipline and rebalance asset allocation with age.

Tata AIA has about ₹22,000 crore of assets under management, out of which 60 per cent are traditional funds and 40 per cent are ULIP funds. Harshad said the break up was earlier 60 per cent ULIPs and 40 per cent traditional, but over the years ULIPs have come down as the market is moving towards protection and traditional products.

Asked about interest rate scenarios and global developments, Harshad said they expect the US Fed to hike rates once more this year and, probably, three hikes next year. In India, he said, they expect one more rate cut before a prolonged pause. On the 10-year bond yields, Harshad said, “We don’t see rates go up significantly as the inflation trajectory has been brought down. The 10-year yield would be in the range of 6.5 per cent to 7.5 per cent.”

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