We think that the equity market is fairly valued at the current levels. We retain our overweight call on equity on a longer-term basis as the Indian growth story, driven by the arbitrage of human intelligence, preponement of consumption and infrastructure spending, is very attractive.
Concerns remain on margin pressure, rising US interest rates and overweight India position of various FIIs. Returns will be driven by profitability growth and not by the re-rating of the market. We are bullish on technology, banking, consumer staples and engineering.
Higher allocation to mid-caps has made the fund more volatile than its peers...
The fund is committed to invest in stocks which offer good return potential over the long term. Investors have a lock-in period of three years in tax funds.
This allows the fund manager to invest for long. Longer term also helps him manage liquidity better. Our tax fund invests in mid- and small-cap companies on the basis of a top-down analysis of macro trends and bottom-up analysis of companies' fundamentals.
Volatility is part of every equity portfolio. We manage volatility by diversification and a long-term investment outlook.
The markets will always be volatile. We can't time every up and down. We stick to our investment approach. If our forecasts come true over a longer period of time, our target price also will come around over that period.
We evaluate our investment holding in terms of holding period returns. We sell a stock only if it meets our target price or gives us a surprise on earnings or we find a better opportunity.
