homepersonal finance NewsHere's why investors prefer to look at stories where growth is little but certain, says Sundaram Mutual Fund
Here's why investors prefer to look at stories where growth is little but certain, says Sundaram Mutual Fund
"The standard deviation of the earnings per share (EPS) of a company should be less for me to buy and that is the mantra in the market,” said Sunil Subramaniam, Managing Director and CEO at Sundaram Mutual Fund.
Investors around the world are not looking at price points but at certainty of growth and investing in those stories. Sunil Subramaniam, Managing Director and CEO at Sundaram Mutual Fund agreeing to this said it is a liquidity driven view and that liquidity is the ETF liquidity which comes in and which has no favours, it is just there to buy all the stocks in the Index.
Second, he said is the foreigners. FII flows are still dominating in relative terms. FII flows are 90 percent into largecap stocks and within that they tend to buy comfort because when they see a company abroad and when that same company is trading here they buy it because of the quality of management and comfort level, he added.
The third things, which is the polarisation cost is the fact that in the overall lending space good quality private sector banks and NBFCs are dominating 95 percent of the lending that is taking place in the market and hence poor quality NBFCs and public sector banks aren’t anywhere in the lending picture. "So, the visibility of earnings is saying, I do not care about the price but I won't my earnings growth to happen," said Subramaniam in an interview with CNBC-TV18.
When asked if the bets therefore should be only on very good quality names and not decent companies with good prospects, he said, "Giving an example that if I have a company which is good company so it can give me 5 percent growth rate in earnings and can give me 20, and I also have another company which is a very good company but there is certainty of giving me 8 percent growth rate then I would buy that 8 percent over that variability between 5 and 20. That is a key challenge which fund managers have to face with that even if there is a little growth, there is reliability."
"The standard deviation of the earnings per share (EPS) of a company should be less for me to buy and that is the mantra in the market,” he said.
Talking about mutual fund growth he said, “In terms of flows we are actually seeing almost 15-20 percent spike and we see that it is driven by the fact that over the last six months mid and smallcaps - the indices have delivered about 20 percent returns so a lot of customers' confidence in terms of putting money to mid and smallcaps is reflecting and those flows have shot up. Also the multicap category flows have also picked up.”
"In terms of re-categorisation, unlike the earlier time of re-categorisation this time the re-categorisation is going to help the market and the industry because it is going to set right some uncertainties with the previous one, which will be helpful to the stock market as a whole," he added.
"We are talking about giving greater flexibility. I think the best thing for SEBI to do just as they have large and midcap they should introduce a new category called mid and smallcap and all your erstwhile smallcap funds would probably then choose to be in the mid and smallcap so they can also then take part of the flexibility provided,” he further said.
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