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No correlation between market performance, general elections: Axis MF CIO

Ashish Gupta, chief investment officer (CIO) for Axis Mutual Fund, said there is no direct correlation between market performance and general elections

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Photo: Shutterstock

BS Web Team New Delhi

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Currently, there is no direct correlation between market performance and general elections, Ashish Gupta, chief investment officer (CIO) for Axis Mutual Fund, said on Monday.

Talking to Business Standard's consulting editor, Tamal Bandyopadhyay, at the Business Standard BFSI Insight Summit 2023 in Mumbai, Gupta said that post-elections, India should not worry about the market but worry about the long-term outlook.

"There are high expectations, increased global uncertainty in geo-politics. We need to be mindful of this rather than the upcoming elections," said Gupta.

Sailesh Raj Bhan, chief investment officer (CIO) (Equity) at Nippon India MF, said that in elections or no elections, the challenge today is near-term expectations of whether it is earnings or returns. "People are investing in equity funds with high return expectations. That's a challenge," he said.

On markets, Bhan said that the only thing that counts is the starting point of the market. "We are in middling markets which are not cheap. In fact, short-term expectations of investors worries me the most. The challenge is the near-term expectations of returns," he added.

On navigating the markets correctly, Sankaran Naren, executive director and chief investment officer (CIO) at ICICI Prudential MF, said, "The best way to play the market is through hybrid strategies."

He said that hybrid funds are the best way to manage volatility.

On predicting elections, Naren said, "Data shows that it is impossible for people in Mumbai to predict elections. It is also impossible for the Indian market to predict the upcoming elections."

On the impact of elections on the markets, Rajeev Radhakrishnan, CIO (Fixed Income) at SBI Funds Management, said, "Elections can lead to volatility but in the end, it's largely the macros that define the market movement."

He added that the elections do not impact financial markets. "It's just an event that can create volatility," he added.

Rajeev Thakkar, chief investment officer (CIO) and director of PPFAS Mutual Fund said, "The only way one can use this information on election-related predictions is to use it as a contra-indicator."

Mahesh Patil, chief investment officer (CIO) at Aditya Birla Sun Life Asset Management Company, said, "Elections outcome do lead to short term volatility but it doesn't matter in the medium term."

Patil added that in the last ten years, the US market has done much better. "The liquidity-driven rally led to buoyancy in the market, which is now ending with rates hardening," said Patil.

On being asked about the growth of the Indian market, Patil said, "In India, there has been a steady and sustainable recovery. The Indian economy may continue to grow at a good pace."

He added: "India should do relatively better than most large global economies. So should our markets. It is a buy-on-dips market."

Thakkar said, "In the current environment of global uncertainties, the logical thing people do is invest domestically."

On risks prevailing in the market, he added, "India consumption and startup theme is where I see the biggest risk." He added that the logical thing at present is to invest in domestic-oriented sectors.

"Debt yields have turned attractive. One doesn't have to go overboard on equities," said Thakkar.

On small and midcaps, Naren said, "Small and midcaps have given over 20 per cent returns in the last 10 years and that's why investors are flocking to it. It's similar to what happened with real estate 10 years back. So now it's an area of concern. The small caps are not as good as they are made out to be."

On market dislocations, Bhan said, "Largest of largest companies in India are available cheaper than the smallest of the smallest companies in India. Tells you how dislocated the markets are."

On taxation changes, Radhakrishnan said, "When investors will take a favourable view on the interest rate, money will come into debt funds despite the change in taxation."

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First Published: Oct 30 2023 | 1:52 PM IST

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