Mr. Jinesh Gopani

Mr. Jinesh Gopani

Head – Equities, Axis AMC

M.M.S. in Finance from the University of Mumbai with a total experience of 17 years in the capital markets of which 8 years are in equity fund management.

Joined the company in 2009 as a Fund Manager and over the years grew to lead the equities team, process and performance at Axis AMC. He has worked with notable companies like Birla Sun Life AMC and Voyager India Capital Private Limited in the past.


Q. There was 8.2% GDP growth reported for April-June quarter of current fiscal. How do you read the numbers and what, according to you, were the key drivers of the same?

Answer: India's economy grew at 2-year high of 8.2 percent in the April-June quarter of 2018-19. The after effects of demonetization tapered the growth numbers last year. However, the growth started picking up albeit at lower pace. This was on account of strong performance of manufacturing and agriculture sectors, increasing its lead over China to remain the world's fastest-growing major economy. The manufacturing sector grew by 13.5 per cent in the first quarter as compared to a negative growth of 1.8 per cent in the same quarter previous. Continued strength in urban consumption demand and hope of stronger rural demand after a good monsoon has spurred some private investment.

Q. What is your expectations on the GDP growth trend for the remaining part of the fiscal? How will it impact the markets?

Answer: The 8.2% GDP growth rate has come as a big shot in the arm of the government as it was criticized severely in the previous financial year when the GDP growth had dropped to a three-year low of 5.7% majorly due to the disruptions caused by the implementation of the Goods and Services Tax (GST). But since, the GDP growth has maintained an unstoppable upward growth trajectory.

High frequency indicators are consistent with growth recovery gathering pace in Q2 2018 and Q3 2018. Consumption growth remains the key driver, while exports growth has remained robust. On the investment side, capital goods import and order inflows of engineering and construction companies indicate a nascent recovery.

Q. The fuel prices have once again reached historical highs. How do you think it will impact the economy?

Answer: India was a key beneficiary of falling crude oil prices between 2013 and 2015. But crude prices have been rising for some time and Brent crude has already touched historical highs. Depreciation in the rupee, is also adding to crude oil’s rising cost. Higher crude prices may adversely affect the twin deficits—fiscal and current account deficit—of the economy, which will have spillover impact on the monetary policy, and consumption and investment behaviour in the economy. Hike in oil prices may lead to inflationary pressure and may force the RBI to hike interest rates. Having said that, considering the general election next year, it is difficult to envisage a significant hike in retail fuel prices, and thus, the direct impact on CPI inflation is likely to remain muted. For equity investors, the impact of oil prices will differ from sector to sector.

Q. How do you see the current valuations of the broad markets and in segments like large, mid and small cap?

Answer: Valuations have been high due to foreign inflows in the 100-200 stocks that they like. But if the oil prices rise to $80 per barrel and if the rupee depreciates then the market could go for a correction or go sideways. Currently, the midcap valuations are high. Volatility will continue as emerging market economies are witnessing huge volatility. Trade wars are having an impact on China and on emerging market currencies which have been depreciating. Besides, the dollar getting stronger which is also impacting EME and all these would in turn have an indirect burden on the rupee. If the tariff war further escalates then there will be further pressure on the market. On the domestic front, we are entering an election season. Besides interest rate hikes, inflation worries could also weigh on the market. We are cautious on the macro side but bullish on the stock specific growth momentum side. There could be a 4 to 5 per cent correction if these risks materialize.

Q. What has been your fund house strategy for investments in the current markets? How would you differentiate your investment process from others?

Answer: The interesting part of our investment process is that it doesn’t change with the market. We are strictly biased towards quality with high growth prospects. There are the four-five principles that we normally stick to. These are: strong corporate governance/Strong promoter pedigree, secular growth rate of the sector, which is anywhere around 1.5 to 2x of GDP; a company with a reasonably strong business model, which demonstrates its pricing power in the product category and the business it is in, and ultimately good ROEs and cash flows.

In the current frame of schemes, rural and consumption stories continue to remain attractive with a long term perspective. Here we are currently focusing on market place disruptors. There are two types of disruptors, Traditional bellwethers looking to reinvent the market place and new disruptors which enter the markets and change the way the industry does business. Our investment focus continues to remain quality centric.

Q. What would be your advice to long term investors looking to create wealth today? Which funds are you recommending?

Answer: One of the biggest lessons is investing in equity markets is not about always making money but not losing it more often. The idea is to generate consistent returns and take advantage of the power of compounding. While doing so, keeping emotions away and not getting trapped in the greed and fear cycle will be rewarded. Equity is an ideal asset class to create wealth over a long term due to its inherent nature. However, current equity valuations are high. We expect elevated levels on volatility for the market. We prefer large caps over mid and small caps. We suggest investors to invest through systematic investment plan (SIP). Lump sum investors looking to invest in funds equity funds, should consider large cap strategies with staggered investments over next 12 months. Investors who have a long term investment horizon may also consider dynamic equity funds where the equity allocation is managed dynamically based on an underlying factor based disciplined and rational model.

Recommended Funds:

  • Axis Blue-chip Fund: Large cap fund with min 80% in large companies.

  • Axis Focused 25 Fund: Invests primarily in top 200 companies by market.

  • Axis Dynamic Equity Fund: Dynamically manages equity allocation using an in-house quantitative model based on market related factors.

Product Labelling

Axis Bluechip Fund
(An open ended equity scheme predominantly investing in large cap stocks)

This product is suitable for investors who are seeking*

  • Capital appreciation over long term
  • Investment in a diversified portfolio predominantly consisting of equity and equity related instruments of large cap companies
Axis Focused 25 Fund
(An open ended equity scheme investing in maximum 25 stocks investing in large cap, mid cap and small cap companies.)

This product is suitable for investors who are seeking*

  • Capital appreciation over long term
  • Investment in a concentrated portfolio of equity & equity related instruments of up to 25 companies
Axis Dynamic Equity Fund
(An open ended dynamic asset allocation fund)

This product is suitable for investors who are seeking*

  • Capital appreciation while generating income over medium to long term
  • Investment in equity and equity related instruments as well as debt and money market instruments while managing risk through active asset allocation

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer

Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh).

Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC).

Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

Imp.Note: We are registered NJ Wealth Partners and this interview published is sourced from NJ Wealth with due permissions. Reproduction of this interview/article/content in any form or medium by any means without prior written permissions of NJ India Invest Pvt. Ltd. is strictly prohibited.
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