The market fall has been relentless in the past few days, so what is the view from the mutual fund camp on this market fall and what is the outlook ahead?
In the wake of the huge market fall, mutual fund investors have withdrawn Rs 500 crore over Monday and Tuesday.
So, what is the view that mutual fund managers have on this market fall and what is the outlook ahead? Mutual fund managers believe that this market fall is less as compared to the quantum of rise.
Reaction to the market fall:
CIO of Cholamandalam MF, Tridib Pathak says, "We are in a market, which has gone up 60% per annum over the last three years, and it has just seen a 30% correction. So this is what the equity markets are all about. They are volatile and do go down."
Geoff Lewis, Head of Investment Services at JF Asset Management also agrees.
He says, "Markets are definitely undergoing a major correction, which is not surprising given how much markets have rallied. What was interesting is that last year we have been seeing redemption from Indian funds, particularly from the European clients. There has been gross buying as well."
Shyam Bhatt of Principal Mutual Fund believes that overvaluation in the market seems to have got wiped out in the last three weeks.
He says, "Fundamentally, we are in a situation where valuations have fallen below historical average PE multiples, which is about 17-18 times. We are now in the zone of 15-10 times. So clearly, we are in a zone, where the overvaluation in the market seems to have got wiped out in the last three weeks."
Outlook ahead:
Pathak says that they are investing in stocks more from a longer-term perspective, he says, "If we find a stock, which is undervalued, we stick on to it even though it may have fallen in the correction."
He is looking at this correction as a buying opportunity. "This correction has created huge amount of opportunities, a lot of stocks which we have been eyeing and were a little expensive are now in the undervalued zone. Certainly we are using this opportunity to reconstruct and to a certain extent rejuvenate our portfolio."
He says that there is nothing in this correction, which changes their normal investment philosophy, which is basically focusing on stocks that are available at attractive valuations.
Pathak says he is not sure about the amount of cash that is lying in the system at any particular point of the day. "Presumably there was a large amount of cash that was there a few months back through NFOs and has got invested. As far as using this opportunity is concerned, one can always move out of one stock and move into another stock because a lot of things have happened in the market over the last one month. This has made relative value attractive in many of the stocks," says Pathak.
Going ahead, Lewis is bullish on India. He says, "I would not like to comment in advance on what our Fund managers are doing. We tend to rank countries in Asia Pacific on a scale from 1-5 from a top-down consideration. Let us not forget that JF Asset Management primarily has a bottom up approach. India is our number one ranked market and we have upgraded it after this correction. So now India and China are both our favourite markets in the region."
Bhatt believes that volatility will continue in the markets. He says, "This is not for the first time that we are seeing such a bounce back in the second half of the day. So one would still have to wait and watch before drawing the conclusion, whether the market has bottomed out or not. I think that the volatility could continue for some more days as well."
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