{"id":89598,"date":"2018-08-27T21:01:05","date_gmt":"2018-08-27T21:01:05","guid":{"rendered":"http:\/\/www.bnreport.com\/fund-manager-relekar-asks-midcap-smallcap-investors-to-have-patience\/"},"modified":"2018-08-27T21:01:05","modified_gmt":"2018-08-27T21:01:05","slug":"fund-manager-relekar-asks-midcap-smallcap-investors-to-have-patience","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/fund-manager-relekar-asks-midcap-smallcap-investors-to-have-patience\/","title":{"rendered":"Fund manager Relekar asks midcap, smallcap investors to have patience"},"content":{"rendered":"

Investors putting money in midcap and smallcap funds for longer timeframe should have higher tolerance against volatility, as the domestic market has many macro headwinds lying in wait, says Sachin Relekar<\/a>, Fund Manager-Equity at LIC Mutual Fund. <\/p>\n

Indian equity indices have been on an upward trajectory for the past few weeks, which has lifted the Sensex well past the 38,600 mark, while Nifty rules near the 11,700 mark, logging nearly 15 per cent gain for the year. Indices representing midcaps<\/a> and smallcaps<\/a>, which have faced a lot of battering this year, are still down 6.5 per cent and 11.5 per cent, respectively, for the year. <\/p>\n

The macro environment has made Relekar cautious about the market, but the micro environment has turned him optimistic on the market. <\/p>\n

\u201cInvestor sentiments could get affected by many factors such as crude oil price, news flow on international trade and domestic elections, to name a few. We are not focusing on the market performance in a one-year kind of time frame. There are opportunities to benefit from the major trends in the business environment. This is where wealth creation opportunities could be found,\u201d he said. <\/p>\n

Relekar, who handles equity assets of around Rs 1,000 crore, says there is plenty of opportunity across sectors in this market from an investment perspective. <\/p>\n

\u201cWe prefer businesses that are scalable, have a clear competitive advantage and are capital efficient. This is where wealth gets created over a long term. Currently, we are invested in private sector banks and NBFCs, IT, consumer and auto,\u201d he told ETMarkets.com. <\/p>\n

Relekar follows a bottom-up approach in investing and prefers to avoid unsustainable businesses as well as companies with corporate governance issues. <\/p>\n

June quarter earnings were largely positive across sectors. While IT, auto and pharma players delivered good results, consumer companies logged strong growth partly due to a low GST transition base, says he. <\/p>\n

Relekars two funds, LIC MF Largecap Fund and LIC MF Largecap & Midcap Fund, have delivered 13 per cent return over last one year. <\/p>\n

The rupee, which slipped below the 70 mark against the dollar recently, has brought IT and pharma sector to forefront. Relekar says the rupee movement is driven by various factors, some of which include interest rate differential, growth rates and capital flows. Capital flows would have a larger impact on the currency in the near term. <\/p>\n

\u201cA depreciation in the Turkish lira<\/a> against the dollar has put pressure on the local currency. The comforting factor, however, is the optimism on domestic macroeconomic fundamentals, optimism on growth and comfort on the fiscal deficit,\u201d he said. <\/p>\n

On the impact of a weaker rupee on the equity market, he said the falling rupee would result in higher inflation and consequently, higher interest rates. Furthermore, it could impact imports and interest rate-sensitive sectors as well as companies with leveraged balance sheets. <\/p>\n

Relekar has a positive view on the IT space and said domestic IT players have diversified into more lucrative digital segments such as artificial intelligence (AI) and cloud computing. <\/p>\n

\u201cManagement commentaries across the companies reflect the same. Coupled with this, largecap IT companies are committed to returning a significant share of their cash to their shareholders,\u201d Relekar said. <\/p>\n

On the other hand, he has been selective in the pharma space. \u201cWhile regulated markets are showing signs of stabilisation, the price erosion for generic drugs continues. Furthermore, R&D expenditure remains at elevated levels. Hence, capital efficiency might remain subdued. Domestic market-focused companies are seeing a better business environment and more accommodating regulatory stance,\u201d he said. <\/p>\n

From the economys point of view, widening of current account deficit is a risk and should be monitored closely, Relekar said. He says inadequate infrastructure remains a major impediment to growth. <\/p>\n

Domestic flows continue to cap down side in the market. Is that going to be a new norm for market? <\/p>\n

Relekar said growing share of financial assets in household savings is going to be a long-term trend. This accelerated during the demonetisation phase. \u201cWe do not think there will be any change directionally. If the economic growth rate improves, it will gain further momentum,\u201d he said. <\/p>\n

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Investors putting money in midcap and smallcap funds for lon..<\/p>\n","protected":false},"author":1,"featured_media":89599,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-89598","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nFund manager Relekar asks midcap, smallcap investors to have patience - Business News Report<\/title>\n<meta name=\"description\" content=\"Investors putting money in midcap and smallcap funds for lon..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/fund-manager-relekar-asks-midcap-smallcap-investors-to-have-patience\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fund manager Relekar asks midcap, smallcap investors to have patience - 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