Mr. Venugopal Manghat
Head - Equities, L&T Mutual Fund
Mr. Venugopal Manghat is Head - Equities at L&T Investment Management Limited. He manages the L&T India Value Fund, L&T Business Cycles Fund, L&T India Large Cap Fund and L&T Arbitrage Opportunities Fund. Venugopal also manages the equity component of L&T Equity Savings Fund and L&T Conservative Hybrid Fund.
Mr. Manghat has an experience of 23 years in equity markets in India. Prior to joining L&T Investment Management, he was Co-head of Equities at Tata Asset Management. He has worked for more than 16 years with Tata Asset Management Limited having joined as a Management Trainee and has worked in various capacities including as dealer for equity & debt, as research analyst for equity & credit, as Head of Research and managing some of the key equity and hybrid schemes for the company. He started his career as a research analyst on the sell side before joining Tata Asset Management.
Mr. Manghat holds a Bachelor of Mathematics degree and an MBA in Finance.
Q. The market mood has changed in recent months. What is your assessment of the market valuations today and what is your stance in general?
Answer: Equity market rebounded in November with the benchmark indices (Sensex and Nifty) surging by 5% each. Improvement in some of the underlying factors like FPIs turning buyers by infusing Rs 12,260 crore into the Indian capital markets, falling crude oil prices, appreciation of rupee against the US dollar and improvement in liquidity situation aided the rally.
BSE Midcap and Smallcap indices underperformed the larger peers by gaining between 2-3%. Global markets were volatile led by softening crude oil prices, trade war and Fed commentary. On the sectoral front, BSE Realty, Capital Goods, Bankex and Auto indices gained between 5-7%. Domestic investors continued to be net buyers with net inflows of $125 million taking their YTD tally to $15.8 billion. Mutual Fund continued to be the net buyer for the 28th straight month with net buying of $348 million in November.
After September and October, markets staged a quick comeback in November as key concerns impacting Indian markets – Oil, currency, G-Sec, FII selling, have seen sharp reversals led by fall in oil prices, which has eased the macro backdrop for India considerably.
We believe investors can invest at this point and add more equity in time as valuations are at a better stage now.
Q.What is your view on the valuations side vis-a-vis the different market segments - namely, large cap, mid cap and small cap?
Answer: There are always some companies where the valuations are worth investing in all the segments of the market. However, with the recent correction in the mid- & small-cap space; many stocks are available for investment.
Q. Recently the growth figures for the economy were revealed. How do you view India's economic situation today and what are the near-term risks?
Answer: The long-term view of the Indian economy has not changed. Meanwhile, geopolitics, oil prices remain the most significant near-term risk for India.
On the micro front, we see stability in earnings as moderation in crude oil prices and stronger currency does provide margin respite. Expect markets to be volatile as we head into the election year. Also, we expect the economy to recover as GST related disruption smoothens and consumption revives on back of improving farm income and implementation of pay commission.
Q. What has been your fund house strategy for investments in the current markets? How would you differentiate your process from other AMCs?
Answer: As an AMC we believe in managing funds on a true-to-label basis. Meaning, all our funds follow their mandates as part of the SEBI category.
Our investment philosophy follows the G.E.M model, which is our proprietary investment process, involving Idea Generation, Evaluation, and Manufacturing & Monitoring of portfolio.
Our competent research team rigorously examines an investment opportunity based on multiple parameters such as management track record, corporate governance, growth prospects, valuations, etc., before considering for inclusion in the portfolio.
We follow bottom-up stock selection using our proprietary G.E.M investment approach to determine the investment portfolio. Furthermore, the risk-management function plays a critical role in highlighting key portfolio risks and defines limits regarding the maximum holding that they can have in a company.
Q. What kind of returns should one expect from the equity markets in the short term to medium term?
Answer: The short-term returns in equity are difficult to predict as volatility due to sentiment has more impact than underlying fundamentals. Recent correction during the year 2018 has made valuations more attractive as an investment point. We believe that valuations may follow the earnings growth trajectory. As earnings continue to recover equities are poised to do well.
Q. What would you advice your investors looking to invest in equities? What investment strategy and type of fund should they invest?
Answer: Individual investors have different needs and requirement; also, their existing exposure to different asset classes will dictate their funds' requirement.
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