New-age businesses have expanded market opportunity: Vinit Sambre, DSP

DSP Mutual Fund is overweight on Banks as we believe they are adequately capitalised

With markets turning volatile due to the geopolitical and macro headwinds, VINIT SAMBRE, Head Equities at DSP Investment Managers tells Nikita Vashisht in an interview that investors should follow SIP as a strategy right now to remove the timing effect. Edited excerpts:

Equity MFs are still holding their ground despite sell-off in markets. What's ticking?

The Indian equity market holds a promising outlook for the future on the back of economic recovery post Covid and superior corporate earnings growth. Investors are using the current fall in the equity market to buy more units at lower net asset value (NAVs). This strategy of averaging at lower levels has worked well in the past as funds have delivered satisfactory performance over the long-term.

Which sectors have seen increased inflows during the past month?

Sectors such as Technology, Pharmaceuticals and Metals have seen increased inflows during the month.

Have you changed your strategy given the dynamic global situation?

The global situation is very dynamic and it is very difficult to predict the outcomes. We are looking beyond the current geopolitical issues to form views on the markets and sectors. Our investment philosophy has not changed as we keep looking for companies that have scalable businesses, competitive advantages, high sustainable returns on equity and earnings growth over time. We also try to identify managements that are credible and capable, show passion and ownership, and have a demonstrated track record of execution and superior capital allocation.

What are your overweight & underweight sectors?

We are overweight on Banks as we believe they are adequately capitalised. Stress in the books is reducing and they are likely to be the beneficiary of economic expansion going ahead. We are also overweight on IT as the demand momentum continues to remain very strong. That apart, we are overweight in Auto and Auto Ancillary as we believe this sector has underperformed for the last four years and is ripe for a cyclical recovery. We are also overweight on cement as we see improvement in demand from rising capex.

On the flipside, we are underweight on Consumer staples, OMCs and Metals.

Should investors go for lumpsum investment in MFs right now or stick to SIPs?

As markets are going through heightened volatility due to the current macro and geopolitical issues, it would be prudent to follow SIP as a strategy to spread the investment evenly and remove the timing effect.

What are your overall market return expectations in CY22?

We would be wary of giving a one-year view as valuations are high and some macro risks, like inflation, are emerging. Our long-term view has not changed and we believe there are ample opportunities available to invest in good quality businesses.

The new age businesses are further expanding the opportunity size. India’s economic growth prospects have improved; the benefit of which will percolate to the companies in the small and midcap space also. Hence our advice for the long-term investors would be to remain invested and increase their exposure into any weakness.