While the Indian market may witness heightened volatility in the short term, Harshad Patil, CIO, Tata AIA Life, strongly believes that the economy remains resilient despite global headwinds. In an interview with MintGenie, he advised that new investors should invest as early as possible and stay invested by averaging out the market volatility to benefit from long-term compounding of returns.
Nifty has been on a downward trend in the last 3-4 months. What do you think is the crux of this? Is it because of the macros, FPI selling, Adani Group saga or something more fundamental is at play here?
There are a host of factors, most of which you have alluded to, that we believe are the cause of the current trends in the Indian equity market. While we may witness heightened market volatility in the short term on account of the reasons you mentioned, we strongly believe that the Indian economy remains resilient despite global headwinds. Moreover, the fundamentals, as seen from the earnings of the Indian corporates, will remain robust in the medium term.
Are the developments at Credit Suisse and SVB the start of a global banking crisis? How will Indian banks be affected now that the confidence of investors has been impacted towards the space?
While a few global banks may be grappling with some sort of crisis, we believe that the Indian banking sector is largely insulated with better governance practices as well as high disclosure levels, thanks to the proactive actions of the regulators over the years.
From a one-year horizon, which sectors would you bet on, and which would you avoid?
We continue to focus on rigorous fundamental analysis and believe in bottom-up stock picking, irrespective of market cycles. At current levels, we believe that select financials and industrials could do well in the near term. Given the relatively weak global sentiments, sectors that are more export-oriented could be impacted in the near term.
Dynamic Advantage Fund and Sustainable Equity Fund are 2 NFOs to be launched by Tata AIA. Why should investors invest in them?
With the Dynamic Advantage Fund and Sustainable Equity Fund, Tata AIA is offering two new investment options for our esteemed policyholders to meet their long-term financial goals.
As we have seen in recent times, the markets are increasingly volatile. In such market conditions, the Dynamic Advantage Fund is ideally suited for a large section of investors as the fund would seek to proactively optimise the asset allocation mix between equity and debt to protect the investment from extreme downside along with providing adequate participation in the growth of the Indian economy.
In recent years, there has been a lot of focus on sustainable investing or ESG investing with both global and Indian corporates focusing on a host of environment, social and governance parameters. These corporates tend to be rewarded by discerning long-term investors, with better valuations, which augurs well for any long-term investment. The Sustainability Equity Fund is an apt offering for those investors who want to enjoy relatively high long-term returns from equity investing and, at the same time, create wealth responsibly by investing in those organisations that are more transparent in their practices and perform well on ESG metrics.
A piece of advice for new investors?
New investors should invest as early as possible and stay invested by averaging out the market volatility to benefit from long-term compounding of returns. The asset allocation should be in line with their risk appetite, which will help them navigate the market volatility smoothly. New investors may prefer to invest through institutional houses that study market dynamics on an ongoing basis and optimise long-term returns for their investors.