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Ignore global panic; time to buy as economy on mend:HDFC MF

HDFC Mutual Fund, Zee media, share purchase

Whether it was 2001, 2008 or 2013, whenever Indian markets have been trading at a reasonable value and have come off sharply because of global factors, it has always been a good opportunity to buy. That in a nutshell, is the message from Prashant Jain, Chief Investment Officer and Executive Director, HDFC Mutual Fund.

In an interview Jain says investors should not be distracted by the ongoing global events, and should instead focus on India's improving fundamentals. "All macro indicators are green, and we should do well over time,"  According to Jain, the market's aggregate price earning multiple is quite reasonable, and corporate earnings growth is at a 17-18 year low. With the economy on the path to recovery, things can only get better from here on.

He says India should not be too concerned about weak global demand as its share of global exports is low. At the same time, India will be one of the biggest beneficiaries of lower commodity prices, particularly crude. In effect, lower commodity prices should more than offset any negatives arising from lower exports, Jain says. He says the market is in a transition phase from a consumption-led growth story to an investment-led one. Investment cycles take time to revive, and an uptick is underway, he says.

However, the recovery in the manufacturing sector will be slower, and that is partly because of the weakness in the metal sector. Jain is bullish on financials as these benefit the most in a recovering economy. He is bullish on consumer discretionary, but is cautious on FMCG as he feels the high valuations are not yet pricing a much lower inflation going forward. Investors looking to invest in equities for the next three to four years can safely expect a 15 percent compounded return, he feels.

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