Sundaram Mutual expects the bull run in the equity markets to continue with foreign portfolio investors gradually redeploying the ₹2.15-lakh-crore corpus they earlier pulled from Indian markets.
Sunil Subramaniam, Managing Director, Sundaram Mutual, said foreign investors had redeemed their investment from Indian market largely due to the rise in crude oil prices and not due to concerns over domestic growth prospects.
With crude oil prices now below $100 a barrel, FPIs have redeployed about ₹50,000 crore and the rest, too, will flow back, he said at a press conference held to launch a new fund offer (NFO) from Sundaram Flexi Cap that is open for subscription till August 30.
The fund house expects the highest-ever collection since SEBI lifted the three-month ban on NFOs in July.
Ravi Gopalakrishnan, Chief Investment Officer (Equity), Sundaram Mutual, said that while the economic growth story was led by consumption demand, the next phase of growth will be driven by investments as corporate India is expected to double its profit to ₹10.6 lakh crore this fiscal and already shows a healthy balance sheet with a sharp decline in debt levels.
The per capita income of India is expected to more than double to $4,700 by FY30 from $2,000 currently, hitting the $3,000-mark by FY25, he said.
For instance, he added, India is where China was in 2005 when it had 16 out of every 1,000 people owning a car; 13 out of 1,000 Indians own a car today.
After an exhilarating growth over these past years in China, 119 people out of every 1,000 own a car and India has the potential to replicate this growth, he said.
The lending rate movement and equity valuation have an inverse relation. In the January-February period the Nifty PE (price-to-equity) was at 23 and today, after a 100 basis points rise in lending rates, it has fallen to 19-20, he said.
Nifty PE means the price investors are willing to pay for every rupee profit earned by the index constituents. At current valuation, an investor is willing to pay ₹20 for every rupee profit collectively earned by all the companies included in Nifty.