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Nimesh believes JP Morgan’s decision to include Indian Government bonds in its JPM GBI Index is a huge development that will positively impact our debt, currency and equity markets materially. 26 Bn USD of passive flows will come into Indian G-Secs in 2024 with the potential of another 20+ Bn USD as other leading indices get influenced to follow suit. Increased demand will bring down yields and support the rupee as well – a welcome move considering bleak prospects of export driven forex inflows. Lower yields and a stable rupee will positively impact cost of capital for companies, thus impacting equity markets positively.
The MF’s flexicap fund is in the process of investing its NFO collections – of of Aug end, less than 20% was invested. Early investments have been made in e-commerce platforms, high quality MNC capital goods companies and high quality names in consumer discretionary and staples. Nimesh says portfolio construction is still work-in-progress and might take another month to complete. The portfolio will be true to positioning – it will be genuinely flexicap, will invest in megatrend harnessing businesses and will have considerable active share.
Rather than looking at PE or PEG for valuation, Nimesh believes in determining intrinsic value of each business – which takes into account intangible factors including brand, longevity, moats etc to determine the price he is willing to pay for a stock.
He expects the portfolio to be overweight capital goods/manufacturing and consumer discretionary and underweight IT services, commodities and PSUs.
One set of stocks he feels may have topped out is businesses that have received large working-capital-intensive Government orders which need to be executed over time, but where the benefits have already been priced in.
Pl send different mutual schemes. Need to understand your companys schemes.
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