in this issue economic status On the Personal Finance Podcast, Roshi Jain, Senior Fund Manager at HDFC Mutual Funds, talks to Aarati Krishnan about how investors can navigate a stock market that faces many speed bumps ahead. Roshi currently manages over US$5 billion in assets for HDFC Mutual Funds, one of the largest mutual funds in India. Roshi is a CA, CFA and IIM-Ahmedabad alumnus with nearly two decades of experience in equity fund management. Before joining HDFC MF, she worked at Franklin Templeton Mutual Fund and Goldman Sachs.
Due to the El Niño phenomenon, India and the world have experienced inflation, especially in food crops. Stocks are the only asset that can outperform inflation over the long run. But in the short run, will inflation hurt growth and earnings? Asked for his opinion on this, Roche said it was difficult to judge how long the inflationary pressure on food would last. However, the government and RBI are taking a two-pronged approach to curb inflation. Therefore, inflation may have a short-term impact on consumer spending. But it is possible to construct a portfolio in which companies can weather these temporary problems and in the long run, stocks will beat inflation. So far, nothing has caused her to change her long-term forecast for portfolio companies, she said.
She was one of the first fund managers to spot value in corporate bank stocks, especially PSUs. Do these individual stocks have room to rise further after their recent gains?
Roshi said some banks will continue to perform well because of their long-term competitive advantages, and continued economic growth itself provides these banks with a growth runway. Bank balance sheets are well capitalized and asset quality is sound. She believes valuations remain attractive against the backdrop of growth leverage and a competitive landscape. On the question of PSUs vs. private banks, she pointed out that ownership is only one dimension of the decision to choose a bank stock, and there are many others.
Regarding whether the re-rating and structural changes in PSU stock are justified, Roshi talked about the need to consider the business cycle and outlook of individual companies when investing in PSUs. A business cycle favoring capital spending and infrastructure investment is working in favor of PSU stock. Therefore, we should not equate past performance with the future, but need to look at it on its own merits.
Usually in India, whenever a general election is approaching, the stock market becomes very volatile. How does Roshi, as a stock fund manager, respond to such an event?
Roshi responded that she has a firm eye on the long-term prospects of her portfolio companies and sees events like this as an opportunity to secure a position at a great company. Stocks are a long-term tool, and we are long-term fundamental research-oriented investors. I believe that as long as we maintain discipline in our investment philosophy and process, we should actually be able to capitalize on any short-term volatility to create long-term value for investors. I think that with this philosophy in mind, volatility actually becomes something we can use instead of something to watch out for.
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(Moderator: Aarati Krishnan, Producers: Anjana PV, Nabodita Ganguly)
About the State of the Economy Podcast
India’s economy has been hailed as a bright spot amid the general gloom gripping the rest of the world. But while other industries appear to be pulling out all the stops, several continue to stall. To help you understand the contradictions in this country, career line Podcasts bringing you experts from finance and marketing to technology and startups