NEW DELHI: Celebrity fund manager Prashant Jain on Friday said it is not the right time to be over-optimistic on the stock market as the real risks are not known. One should stay cautious, have moderate return expectations and invest for a long-term horizon, he said.
HDFC Mutual Fund’s Chief Investment Officer (CIO) said he does not believe the recent correction was reasonable and said one must be prepared for moderate returns in the short term. He noted that the fall was steep for stocks where company earnings were weak or where there were massive earnings expectations into the future. This is how excess gets out of the market over time, said Jain, who manages over Rs 95,000 crore in assets.
The money manager said the market would stabilise in the short term if sanctions on Russia are not harsh.
“Given the scale of Russian oil and gas supplies, any meaningful sanctions are probably impractical,” Jain, who has over 28 years of experience as a fund manager, said.
“Time and again, the market usually bottoms out closer to the peak of a panic. The peak of the panic is probably behind us. From a medium-term perspective, the focus would again come back to US inflation, interest rates, economic growth and to valuations and how energy prices behave,” Jain said.
India’s ability to absorb higher oil prices has improved in the last 13-14 years, he said. The outlook for the IT sector, which is a key earner of foreign exchange in India remains quite robust. India should be able to handle crude price at $90 a barrel for an extended period of time quite well, even as crude oil prices would be a negative for India, he argued.
Stating that there is no reason to be pessimistic on India’s long-term story, Jain said credit growth recovery will be a key monitorable.
The NPA cycle is behind us and we are waiting for the capex cycle, he said. He sees signs of pick up in infra and industrial capex. Re-rating in banks may be delayed, Jain said.
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