This CIO points out two risks that Indian market investors need to watch out for

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Krishna Sanghavi, CIO of Equities at Mahindra Manulife Investment Management, believes while India is a in a sweet spot currently, investors in should be vigilant about two factors: global developments and the risk of complacency.

One clear risk is the global context, as India is deeply integrated with it.  Investors must recognise that Indian markets are trading at high valuations compared to other global markets and such valuations depend heavily on positive sentiment, which needs to be maintained, he noted.

“The second risk, in the Indian context, is that expectations are so strong among investors…one is on the earnings growth itself where expectations are high in terms of the ability to do much faster. The second part is the belief that because nothing much can go wrong, let me take a leverage route to participation (in the market),” said Sanghavi who manages nearly $2.3 billion in funds.

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In a chat with CNBC-TV18, he also talked at length about the themes that his portfolio focusses on.

“The core economies is a theme which we like. And that’s pretty much part of our portfolio is focusing more on…the capacity creation for next five to seven years…the other part is India manufacturing, which is an inter linkage to it. Let’s put it this way. The core economy provides the infrastructure support while manufacturing is the next story for India,” he said.

The core segment of the economy, he noted, is now growing after 10 years of underinvestment.

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In renewable energy, he believes transition is a must and the right steps are happening on that front. So parallelly, every utility is investing in renewable as well as in thermal, he said.

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“India is the only country which has a target to be net zero by 2070. So the very fact that you have a 45-year runway of achieving net zero, there is a fair chance that we are going to consume more of those products before you reach your peaking point and from where the reduction starts,” he noted.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow