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Expect money to start coming back to India in 7-10 days: Sunil Subramaniam, Sundaram Mutual Fund

Nifty earnings will largely be driven by banks results, says Sundaram MF's MD & CEO

ET Now|
Last Updated: Aug 13, 2019, 09.56 PM IST
Sunil Subramaniam-Sundaram MF-1200
On a month to date basis, there have been FII outflows from all emerging markets. So, initially post budget, it did get triggered by the FPI taxation issue, but today it is a larger issue in terms of money flow coming out of emerging market as a whole and not so much India specific, says Sunil Subramaniam, MD & CEO, Sundaram Mutual Fund. Excerpts from an interview with ETNOW.

It has been quite a turbulent market in the last few weeks with consistent foreign fund outflows because of the FPI surcharge issue. What is your view on the market sentiment?
FPIs naturally have been upset with the taxation issue and meetings have been held with the finance minister. Last, we understand that it has also been escalated to the PMO in terms of the tax. So, we remain reasonably optimistic that some sort of correction on the taxation front either a rollback or some modification to favour the FPIs would be coming through in the coming weeks.

But that apart, we also observe on month to date basis, that there have been FII outflows from all emerging markets. So I would say that while initially post budget it did get triggered by this taxation issue, today it is the larger issue in terms of money flow coming out of emerging market as a whole and it is not so much India specific. So, we do think that with the situation developing, money should start coming back to India in about a week, ten days time as there is some resolution on the taxation front.

What is it that you are making of the earnings so far, given that we are nearing the end of the Q1 numbers? Do any sectors stand out?
Bank lending has been going up and NPA are coming down and we are seeing that effect on the P&L. We believe that this is the sector which should continue to hold up and I think this year’s Nifty earnings will largely be driven on the back of the bank results. The auto sector is continuing to show the challenges which they started last year with the GST stuff and then the BS-VI and then we have had this issue on the NBFC crisis. All told, that impact is being felt very severely by the auto industry.

What would be the rationale for launching a multicap fund? Can you share the features of these funds?
Absolutely. So let me start off by saying that this is not a fund which is being launched from a timing perspective. We believe that the multicap fund is an all weather fund and it was a gap in our product basket and also the view that strategically the multicap segment is one where we suggest that investors should always park a portion of their equity assets.

The reason is the flexibility inherent in a multicap fund for the fund manager to play out the emerging views. If you take a single cap fund like a largecap or midcap, it generally follows a standard philosophy of a buy and hold or a top down sector approach and then buying stocks within that whereas the multicap carries a flexibility that it does not fall in love with any particular cap segment and at the same time, it has got a dynamism.

So the flexible nature of the fund is what made us add this to our portfolio of schemes. The timing is just coincidental. It is happening at a time when the market is facing corrections where it has also added value to the multicap segment because in the absence of a clear direction on which is going to be the clear winner over the next three to five years, multicap gives the best opportunity to hedge our bets.

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