Got Rs 10 lakh to invest? If you are looking for some guidance on where to put your money, you might want to listen to what Janakiraman Rengaraju has to say. He is the head of equities at Franklin Templeton India, one of the leading mutual fund houses in the country. He has over 20 years of experience in the Indian equity market and manages several funds across different categories.
In a recent interview, he shared his views on the current market scenario, the opportunities and challenges for investors, and the sectors and themes that he is bullish on. He also suggested a mutual fund category that he thinks can offer good returns in the long term.
Got Rs 10 lakh to invest? The market outlook:
According to Janakiraman, the Indian market is in a sweet spot right now, thanks to the strong economic recovery, the vaccination drive, policy support, and global liquidity. He believes that the market can continue to do well in the medium to long term as earnings growth picks up and valuations become more reasonable.
He also said that the market is not in a bubble, as some people fear, but rather in a structural bull run that can last for several years. He pointed out that the market is not driven by a few sectors or stocks but by broad-based participation from various segments. He also said that the market is not dependent on foreign inflows, as domestic investors have become more mature and confident.
However, he also cautioned that the market is not without risks, and investors should be prepared for some volatility and corrections along the way. He said that the main risks are inflation, interest rates, and the pandemic. He advised investors to be selective and focus on the quality and growth aspects of the companies they invest in.
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The investment tips
Janakiraman shared some useful tips for investors who want to make the most of market opportunities. He said that investors should:
- Have a long-term horizon of at least 5 to 7 years, and avoid chasing short-term trends or fads.
- Have a diversified portfolio that can withstand different market cycles and scenarios.
- Have a balanced approach that can capture both the value and the growth opportunities in the market.
- Have a disciplined process that can help them identify the right stocks and funds and stick to their investment plan.
- Have a regular review of their portfolio and make necessary changes based on their goals and risk appetite.
The sectoral bets
Janakiraman also revealed his top sectoral bets for the long term. He said that he is positive on five sectors that he thinks can offer superior returns and growth prospects. These are:
- Emerging market equities: He said that India is one of the best emerging markets in the world and has a lot of potential to grow faster than the developed markets. He said that India has a large and young population, a rising middle class, a strong consumption story, a vibrant entrepreneurial ecosystem, and a reform-oriented government. He said that these factors can drive the growth of various sectors and companies in India and create wealth for investors.
- Sectoral funds: He said that sectoral funds are a good way to play the thematic opportunities in the market. He said that sectoral funds can offer higher returns than diversified funds if investors can time their entry and exit well. He said that some of the sectors that he likes are banking and financial services, information technology, pharmaceuticals, and consumer discretionary. He said that these sectors can benefit from the economic recovery, the digital transformation, healthcare spending, and discretionary consumption in the country.
- Power utility companies: He said that power utility companies are attractive from a value perspective, as they are trading at low valuations and offer high dividend yields. He said that these companies can also benefit from the increasing demand for electricity, the renewable energy push, and the improvement in their operational efficiency and balance sheets. He said that these companies can offer steady and stable returns to investors with low volatility and risk.
- ESG funds: He said that ESG funds are a new and emerging category of funds that invest in companies that follow the environmental, social, and governance (ESG) criteria. He said that ESG funds can offer both financial and non-financial benefits to investors, as they can generate better returns and lower risks while also contributing to social and environmental causes. He said that ESG funds can also help investors align their investments with their values and beliefs and create a positive impact on the world.
- Flexi-cap funds: He said that flexi-cap funds are a versatile and flexible category of funds that can invest across the market capitalization spectrum, from large-cap to mid-cap to small-cap. He said that flexi-cap funds can offer the best of both worlds, as they can capture the stability and safety of the large caps and the growth and potential of the mid- and small caps. He said that flexi-cap funds can also adjust their portfolio allocation based on market conditions and opportunities and offer optimal returns to investors.
The conclusion
Janakiraman concluded by saying that investors who have Rs 10 lakh to invest can put their money in these five sectors or one mutual fund category, depending on their risk profile and preference. He said that these sectors and categories can offer good returns in the long term and help investors achieve their financial goals. He also reiterated that investors should have a long-term horizon, a diversified portfolio, a balanced approach, a disciplined process, and a regular review of their investments. He said that these are the key ingredients for a successful investment journey.
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