ETMarkets Fund Manager Talk: Despite global crisis, this fund manager sees bottom fishing opportunities in IT, pharma sectors

The Nifty is just a few points away from its lifetime high. Do you think the market set-up is conducive for the index to hit a new milestone?
Nifty-50 has witnessed strong momentum, right since March and it has been mainly due to strong FPI inflows. FPIs have been attracted towards emerging markets (EMs), especially

India, which has enabled us to remain resilient despite global challenges. Given our strong GDP and PMI growth numbers, there is every likelihood that whilst this momentum is on, we might touch a new milestone.

Do you see FPI inflows sustaining in the near term and what are the triggers for the same?
There seems to be a high probability that FPI inflows will sustain in the near term. The primary reason is that whilst developed economies have been debating on the impending recession and how long it will last, India’s GDP growth is touching 5-6%. This in itself shows our resilience as an economy.

There are many other sectors where India has picked up manufacturing & services and other countries are dependent on India.

All these factors demand a premium in valuation due to the quality delivered and that’s why India is trading at higher valuations and still witnessing strong flows.
Where are you seeing bottom-up opportunities emerging for investors?
Various asset classes such as debt, gold have definitely been kind to investors since the past couple of months. However, they aren’t ideal for bottom fishing at these levels.

The best play would be to do bottom picking in several pockets of equity such as IT, pharma sectors which have faced the wrath of FPI outflows in the past year and are now stable from a risk-return perspective from a longer time frame.

How much AUM do you directly oversee at Samco Mutual Fund?
At Samco Mutual Fund, there are currently 3 active schemes totalling to an AUM of around Rs 840 crore. I directly oversee all these funds and we are also in the process of launching a new scheme, Samco Active Momentum Fund whose NFO will open for subscription from June 15.

Can you tell us the thought behind the “Active Momentum fund”. What’s the strategy for stock selection?
An extensive research done by MSCI World Momentum Index substantiates that the “momentum” factor has consistently proven itself as one of the most potent generators of an alpha.

Building upon this powerful investment strategy, SAMCO Active Momentum Fund meticulously selects stocks with momentum characteristics such as breakouts, price leadership, and more.

By deploying our proprietary momentum-seeking algorithm, we intent to capitalize on the prevailing strong price trend and the fund aims to outperform the market and generate superior returns for investors.

Do you think earnings growth concerns for new-age technology companies is gradually ebbing? Will FY24 turn the tables for them?
It is too soon to judge if the earnings growth concerns around new-age technology companies are ebbing and the tables for them will turn for sure in FY24. Given that their listing valuations were definitely high, they faced a beating in stock prices which is now seeing some amount of normalisation.

But it is still some time before we can see genuine improvement in their earnings growth because the stock price normalisation could just be a result of huge downsides due to premium listing valuations from the last year.

Which funds are expected to see higher traction in the coming months? Large cap, midcap, or small-cap category?
In our opinion, the best bet would be on Flexi-cap funds, because that gives flexibility to the fund manager to pick genuine quality stocks, irrespective of the market cap and leverage on the fundamental quality aspect of the business rather than playing on the cyclical movement in market cap.

Given that value style of investing was in trend in the past year, there is very high likelihood that growth style picks up again very soon this year.

Which are the sectors your fund is extremely bullish/bearish on and why?
Our current active equity funds are very bullish on finance and technology sectors for a longer term. IT is in a correction phase but has definitely made a bottom compared to last year’s June levels.

We feel that if someone doesn’t enter at these levels, it might get very late to benefit from the upward movement a few months down the line.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)