Investors should be ready for lump-sum investing opportunities as the markets dip, according to HDFC Asset Management Co.'s Chirag Setalvad.
Systematic investment plans are always a sensible way of approaching the market, but it also has to be enhanced over the period with occasional lump-sum investing, ideally when markets are correcting and cheap, the senior fund manager (equity) at India's third-largest AMC by average assets under management, told BQ Prime's Niraj Shah.
“Now, in fact, is a good time for lump sum investing as the market is correcting.”
“We have seen a very sharp correction already in global markets. For example, PE multiples in the U.S. have corrected from 22 times to 16 times, despite which valuations are still close to historical averages. Even in the Indian context, while valuations have corrected, we have gone back to average valuations; we have not corrected below average.”
Valuations in India, Setalvad said, are neither cheap nor expensive.
The next six months will be uncertain with inflation remaining at high levels, he said. But due to sharp corrections in commodity prices, barring coal and oil, there's a high possibility of inflation peaking out in the next six to nine months.
Relative Vs Absolute Growth
India has done consistently well in the last 30-40 years in terms of relative and absolute growth, he said.
According to him, the absolute growth figures—both India and globally—will come down because of rapid growth and quantitative easing over the last few years.
But India will “stand out” in terms of relative growth, and the gap with global peers may widen, Setalvad said. India will be better positioned than its global peers as it's a much more “locally-centered economy”, he said.
Setalvad also said the correlation between equity markets and oil prices in India is “extremely low”.
Watch the full interview here:
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