IPOs Helping Absorb Excess Liquidity, Keeping Valuation In Check, Says Axis AMC's Ashish Gupta
Through IPOs, diverse companies are coming to the market, which is increasing investment choices for traders, he said.
Fresh supply of equities because of initial public offerings resuming is helping absorb excess liquidity and keep valuation in check, said Ashish Gupta, chief investment officer, Axis Asset Management Co. Gupta noted that another good thing is that through IPOs, diverse companies are coming to the market, which is increasing investment choices for traders.
"There are quite a few initial public offerings lined up from this week, with some large ones slated in the coming weeks. This is a trend which Axis AMC noticed over the past 18 months, as it is outpacing flows into mutual funds," Gupta said.
So far in the current year, Axis AMC has participated in two initial public offerings. Overall, in the primary market, the frenzy has subsided compared to the second half of the previous financial year, he said.
Axis AMC has seen an increase in promoter and private equity stake sales in recent days, he said. It has been selective in participating in a couple of private equity stake sale, added Gupta.
Axis AMC Sees Improvement From September
In terms of gains on year-to-date basis, India is not an outlier compared to other markets. It has actually underperformed many global markets, Gupta said. Earnings started missing estimates from June last year. Last year, traders were expecting earnings growth of 16–17% but it came down to 7–8%. This financial year, earnings have started with 11–12% growth, Gupta noted.
Many factors hinge on the second half of the year. Broader indicators like GST collections advanced. However, power demand, auto sales, and consumer sales continued to soften because of seasonality and other reasons, he said.
Liquidity and regulatory easing will start showing effect from September. Hence, Axis AMC expects things will turn to look good in Indian markets from then, he said.
BFSI Sector Moving Slow
Banking and financial services sector is trading below historic multiple. It is also going slower than its historic growth. Axis AMC sees only 9% or 10% credit growth. There are several other pockets which offer growth as well, Gupta said.
