Mr. Ritesh Jain
Chief Investment Officer (CIO)
BNP Paribas Mutual Fund
Mr. Ritesh Jain has been appointed as Chief Investment Officer (CIO) of BNP Paribas Mutual Fund. In this role, he is responsible for leading a team of investment professionals managing a wide range of funds across different asset classes. Mr. Jain has close to 20 years in the Financial Services Industry and has held leadership positions in various Asset Management Companies. Prior to BNP Paribas Mutual Fund, Mr. Jain was the Chief Investment Officer at Tata Asset Management. Mr. Jain is a forward - thinking leader with a passion for growing businesses in a dynamic market environment. His experience and expertise have entailed significant portfolio growth and development. His investment philosophy is characterized by a long-term view and he believes in a participatory approach to leadership coupled with cross functional collaboration and strong team work.
Mr. Jain is a keen follower of current affairs and his articles regularly feature in leading financial publications such as Economic Times, Mint, The Wall Street Journal et al. He is also the author of a weekly column in ET markets, “What I read” which has a readership of over 50000. Academically, he has completed his Master of Business Economics in 1997. He has an active interest in travelling, playing squash and keeping abreast with local and global affairs.
Q. The Q1 GDP growth figure at 5.7% raised many eye brows. How do you read this figure and what would be your message to investors how might be a bit uncertain at this stage?
Answer: Agriculture growth slowed down to 2.3% growth rate predominantly due to lower realization. However, the bigger disappointment was due to Manufacturing sector which grew at a 5 year low of 1.2% the key reasons attributable for the same could be the inventory de-stocking and production cuts in manufactured goods ahead of GST implementation in Q2FY17. The slowdown caused in the short term due to implementation of GST and some lagging impact of demonetization could well be transitory in nature and to that extent, one may have to look at the longer term outlook which we believe is still promising. (Source: CEIC)
While FY18 GDP expectations could come down, FY19 could see acceleration in growth as the one-time GST led impact goes away. We believe equities are longer term asset class and one should look at least at 2-3 year horizon if not more.
Q. How soon and to what extent can the Indian economy witness improved GDP growth figures? What would be the key driving factors for growth from here?
Answer: We expect the quarterly growth rate to improve from the low of 1QFY18 as the economy recovers from impact of demonetization and transitory disruption caused by implementation of GST. We are of the view that macro-economic fundamentals for the domestic economy would be weak between years 2017 to 2020, while the reverse would be true for the micro scenario (read equities). Although government initiatives like Farm Loan Waiver, Housing Interest Rate Subsidy and Seventh Pay Commission would add stress to the government’s finances, but they have the potential to boost consumption and spur infrastructure growth which could likely drive the earnings growth in the coming years.
Q. The market has seen greater domestic retail participation but subdued interest from FIIs. Why haven't the FIIs shown the same level of enthusiasm as their domestic counterparts? How do you think they are reading our markets at a global perspective?
Answer: Domestic investor participation, especially through the mutual fund route has been positive over the last few years and SIP is a significant contributor to monthly flows currently. FIIs have been adding to exposure to India on a longer term basis for almost every year barring one or two years. First half of CY17 saw one of the highest inflows from FIIs into Indian equities. While last few months have seen some outflows which could be some amount of profit booking due to sharp market appreciation assisted by rupee depreciation. We believe India continues to be attractive for a long term investor and flows would eventually follow the fundamentals.
Q. There is now about 20 months remaining for this government. What key reforms and steps do you think the government will focus on from here?
Answer: The government has been focused on accelerating infrastructure spend in order to provide the much needed boost to the economy as the private sector capex is yet to pick up. Government’s focus has been on Road, Railways, Defence and affordable housing. We believe that is likely to continue going forward as well. At the state level, we have seen farm loan waiver announcement by few states and there may be some more which could reduce the debt burden of farmers to some extent providing some scope for consumption improvement. From a longer term perspective, the government’s focus is on doubling farmer’s income. One step in that direction is the increase in crop protection which the government is targeting to take to 50% coverage by FY19. While some of the measures can test the combined fiscal deficit limits, we believe overall the measures can help in growth through infrastructure spending and some pick up in consumption due to Pay Commission benefits and other sops.
Q. A lot investors do not outperform markets when it comes to their investments. In you r experience, what have been the key reasons for their long term underperformance?
Answer: An Investor should have a proper well thought out investment philosophy and process which is followed diligently in all phases of the market. We believe that it is one of the key criteria for success. Frequent changes in investment style and processes can impact the portfolio and the returns. At BNP, we follow an investment philosophy called BMV, which stands for Business – Management and Valuation. We as a team have stuck to this philosophy and focused on identifying superior and sustainable earnings growth companies.
Q. What would be your advice to someone who is looking forward for investments in equities at this time? Assuming he is aiming for long term wealth creation, what strategy and time horizon would you suggest him to adopt?
Answer: Equity is a long term asset class where an Investor should, ideally, have an investment horizon of at least 3 years and maybe even more. While near term valuations are higher than the long term average, we believe earnings growth is likely to accelerate over next 2-3 years period. From that perspective, we believe, Indian equities outlook is positive from the next 2-3 year horizon. One of the best disciplined ways to participate in the Indian equities is through SIPs facility available with Mutual Funds.
The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.
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