Indian market likely to double in 5 years, says Manish Jain of Ambit Asset Management
Manish Jain, Fund Manager, Coffee Can PMS, Ambit Asset Management, believes that the Indian market can double in the next 5 years. With the economy seemingly growing in the high single digits to low double digits steadily, the Nifty EPS should grow at a steady double-digit pace sustainably, he said in an interview with LiveMint. He also favours equity over debt, saying it is the best vehicle to create long-term wealth. Don’t get swayed by near-term momentum and always aim for long-term wealth creation by investing in quality businesses, Jain advised investors.
Edited Excerpts:
With the recent decline, do you believe the valuations of the Indian market are fair to buy? Is the risk-reward favorable?
Post the recent softness, Nifty trades at a discount to long-term average valuation when earnings growth remains strong and steady. So yes, valuations do look attractive for a long-term quality-oriented investor, the only caveat being that short-term volatility may persist and we would recommend using the same to build long-term positions. There are pockets of value that exist across multiple sectors; investors need a strong bottom-up analysis approach.
What does your model portfolio look like currently?
We continue to maintain weight on banks and have increased positions in auto & IT. Recently, we have become very constructive (albeit selectively) on chemicals. However, there is a negligible cash position.
After strong inflows, FPIs have turned net sellers. How long do you see this continuing?
FII selling is dependent on multiple factors including the US economy and yields. So while India remains a very attractive long-term opportunity, near-term volatility in markets may persist due to choppy flows.
Which sectors should one stay away from right now on the back of the Israel-Palestine war, rising crude prices, and Q2 earnings?
The Indian economy remains on a strong footing and has demonstrated in the past that we are largely unaffected, so from a long-term perspective, we are not worried. However, in the absolute near term, some key sectors like building materials, etc. may be impacted.
While broader markets have outperformed the benchmarks, the recent Middle East crisis led to a massive drop in mid and small-cap stocks. Should investors move towards the largecaps or stay for the long term?
Largecaps have generally underperformed significantly as compared to smallcaps and microcaps. We believe quality comfort, earnings comfort, and valuations are suggesting that investors would do well to move money towards quality and more specifically largecaps.
With so many IPOs in line for the remainder of 2023, do you think this trend will continue?
IPOs, their quantum, and their success are a function of how markets are doing. So, yes in the absolute near term, the trend should continue.
Should investors buy IPOs in this market? What should they look for before investing in them?
It’s fairly simple, look at sustainability, moat, valuation, and quality of promoters. It’s always about quality, don’t get swayed by the flow.
What is your 5-year prediction for the Indian market? Can it double?
With the economy looking like growing in the high single digits to low double digits steadily, Nifty EPS should grow at a steady double-digit pace sustainably. Hence, sticking our neck out, we would say yes, absolutely.
Debt or equity – what is your pick in the current scenario?
Equity, we have always been equity-oriented and believe that it is the best vehicle to create long-term wealth.
One piece of advice for new investors?
Don’t get swayed by near-term momentum and always aim for long-term wealth creation by investing in quality businesses.
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Updated: 03 Nov 2023, 03:06 PM IST