This 17,000-Crore Fund Manager Is Bullish On Medium-Term Investment Amid Election Volatility

This is a 'buy on dips' market rather than a 'sell on rally' market, from a three- to five-year perspective. That's according to Trideep Bhattacharya, chief investment officer of equities at Edelwiess Asset Management Co.

The election outcome is a minor issue in the medium term, as long as there is no regime change, he said. However, in the near term, a hung parliament or regime change could be cause for concern. Otherwise, the size of the majority is more of a topic for debate than a significant factor for the stock market or policy, according to the fund manager who oversees assets worth Rs 16,989 crore.

"The overall market outlook depends on the gains made by individuals and their specific circumstances. Regardless of the political leadership, the underlying earnings resilience of Indian corporates is noteworthy from a medium-term standpoint," Bhattacharya said.

For example, the real estate sector in India demonstrated resilience, with unsold inventory at a 12-year low. This contrasts with the situation in other parts of the world, such as China or the USA, where the picture is bleaker, he said.

Despite experiencing two weak years of growth following the Covid pandemic, followed by two strong years, and an anticipated normalised year of growth in FY25, India still exhibits pockets of earnings resilience, Bhattacharya said.

He expects the growth rate to be around 15–17%, which is considered fairly resilient and well-distributed across sectors within the context of the last 20 years of India's economic performance, even though it may be lower than in previous years.

"Don't undermine the earnings resilience of India as yet, and some pockets within the country are very country specific and very bottom-up, and that needs to be taken into cognizance. Use the volatility to increase the position, rather than sell on the rally and stay in cash," he advised.

"Ultimately, if the current government secures a total share count ranging from 300 to 350, I believe the market will react positively... A share count exceeding 350 will likely be met with enthusiasm, and the closer it gets to 400, the more favourable the response will be. However, if the combined share count of the current government falls below 300, it could pose a problem," Bhattacharya said.

Amid market uncertainty leading up to June 4, the AMC is leveraging this weakness to invest in and expand exposure to sectors where it anticipates resilient earnings in the coming year or two, he said.

Capex, power, real estate, non-banking finance companies and defence are themes where investors can take advantage of weakness to buy before June 4, he said.

Earnings of these sectors are expected to remain strong in the coming years, according to Bhattacharya.