Bandhan Large & Midcap Fund completes 20 years of wealth creation this month, with a strong track record of top quartile performance across time horizons from 1 yr to 10 yrs.
Manish says agility is the key to consistent alpha creation. Good blend of tactical sectoral bets coupled with backing a few longer term winners is what helps deliver performance with some consistency.
Three cycles impact our stocks – the Indian cycle, the EM cycle and the US cycle. Each cycle has differing impact on different sectors and stocks. Keeping track of all 3 cycles helps spot opportunities across sectors. Nimbly moving in and out based on these cycles is key to capturing gains.
He finds good value today in several established FMCG (fast moving consumer goods) and FMEG (fast moving electrical goods) companies. Some are available at 1x-3x sales while the norm has traditionally been in the 4x to 6x range. Looking at PE when the cycle is turning is less relevant than price/sales as margins and earnings are depressed at the start of a cycle.
He assigns a 50-60% probability to India avoiding the additional 25% US tariffs, but adds that even if they are levied, he expects generic pharma to be excluded as that would materially impact the common man in the US.
He believes the Government and RBI must look at further stimulating domestic demand through tax and interest rate cuts to not only get us out of the current situation of single digit nominal growth, but also as a cushion to support us in a choppy international trade environment.
With tax revenues coming in short of targets for the last 3 months and defense spending unlikely to be cut, expect some moderation in Government capex in infrastructure building.
His base case market outlook is for us to putter along with the current time correction phase for a few more months by which time earnings can catch up with valuations, hopefully aided by some stimulus measures.