We expect economy to grow at 6% in FY13: Pankaj Murarka
Published: 21st June 2012 04:18 PM
Last Updated: 21st June 2012 04:18 PM
the sluggish growth outlook, we expect the earnings growth in FY13
to be about 10%," says Pankaj Murarka Fund Manager- Equity at Axis
In an exclusive interview with Varsha Inamdar, Pankaj Murarka
further said, "We are positive on Healthcare, Pvt Sector Banks and
Consumers. We think these sectors offer good growth opportunities
and have a better resilience to adverse macro environment."
> Which are the sectors that you would bet strongly on? Where
do you think value lies in FY13?We are positive on Healthcare, Pvt
Sector Banks and Consumers. We think these sectors offer good
growth opportunities and have a better resilience to adverse macro
> Could you explain the stock picking approach and risk
management processes in place at the Axis Mutual Fund? Our
investment decisions are research based. We do extensive
macroeconomic and company research internally. This data is then
verified against historical trends. The investment process utilizes
both "Top down" and "Bottom up" approaches to identify
fundamentally sound companies with sustainable earnings growth
potential, credible management and acceptable liquidity.
Awareness and assessment of risk assumed is important to us.
Risk management is embedded in the investment process itself, which
ensures that all possible risks are addressed through appropriate
risk management strategies.
> How do you see global economic and market outlook? Global
markets are in a state of flux and are looking for direction from
policy makers. The growth in Indian economy has softened
significantly to 5.3% in 4qfy12 and 6.5% in FY12. Investments in
the economy have moderated significantly and will have bearing on
growth going forward. We expect the economy to grow at 6% in FY13 .
Indian markets are trading at 12x 1-year forward earnings.
Valuations of markets are at cyclical lows and they make a very
attractive entry point into equities for the long term investor.
Given the sluggish growth outlook, we expect the earnings growth in
FY13 to be about 10%.
> How do you perceive inflation and currency fluctuations as
a challenge facing the Indian market? While core manufacturing
inflation has fallen to 4.5-5% (which is nearer to RBI"s comfort
zone) the rising prices of food has led to higher headline and
retail inflation which has constrained the RBI from lowering
interest rates. Recent increase to MSPs will also keep upward
pressure on consumer inflation in the months to come. Another main
issue affecting monetary decisions is higher fiscal deficits which
are largely dependent on government policies. Both these factors
could result in constrained investments, thereby affecting India"s
long term growth potential.
Recent devaluation of the Rupee is a result of both structurally
higher fiscal deficit and due to international factors such as
Dollar appreciation. We believe that these external factors are
transient but main issue of fiscal deficit i.e. government spending
needs to be sorted out. Until then a constant currency depreciation
could accelerate our current account deficit and have an
inflationary impact on the economy.