Indian Retail Gets A Sense Of Maturity
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Over the last two decades, the Indian retail market has witnessed phenomenal changes, evolving rapidly from neighbourhood grocery shops to large shopping malls, offering a global experience. The highly tech-driven e-commerce model has been a major differentiator for the segment. Organised retail is gradually gaining grounds in the country. 

Sharing his views on the same, Sanjay Dongre, Executive Vice President and Senior Fund Manager – Equity, UTI AMC, during an interview with Himali Patel, says the Indian retail investor has achieved a sense of maturity after witnessing rise and fall in the market in the last two decades

Edited excerpts: 

Q1. According to AMFI, growth and equity-oriented schemes were down by 28 per cent in September. Any specific reason for the outflow for the same?

Equity inflows in mutual funds slowed in September to Rs 5,180 crore, as compared to Rs 8,800 crore in August and Rs 8,900 crore in July. This is because high frequency indicators are pointing to a slowdown in the economy, which may impact the sentiments of investors. This in turn may be partly responsible for slowdown of equity inflows in mutual funds in September 2019. There is bound to be a volatility in the monthly equity inflows into mutual funds. However, the monthly equity inflow into mutual funds has been positive for the last few years.

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Historically, the retail investor always got excited when the markets rallied to higher levels of valuations and shunned the market whenever there was a slump or the market quoted lower than average valuations. Now, the Indian retail investor has achieved a sense of maturity after witnessing rise and fall in the market in the last 20 years. He or she has realised the fact that the equity as an asset class yields higher return than any other asset class in the long term. The average Indian retail investor has truly understood the Warren Buffet’s principal, “Be fearful when others are greedy and be greedy when others are fearful.” Hence, continuation of positive inflow from retail investors even in a weak market is the best thing that has happened to the Indian stock market in the last three years.

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Q2. Is the government taking any measures to boost investors’ confidence? 

Any measures or reforms, which will improve the economic growth in the short to medium terms, would be highly welcomed by investors. Currently, significant challenges continue to persist in some pockets of the economy such as real estate, MSME and NBFC. Availability of credit may reduce difficulties faced by these sectors.

Q3. What is your outlook for the equity market for the next three months?

Well, the Indian equity markets should gear up to address certain challenges in the short-term. Some of them include the following: 

- Global economic growth is slowing down as the trade war between the US and China coupled with the waning impact of fiscal stimulus in the US economy is leading of lower growth in the country’s economy

- Growth concerns are weighing down central banks across the globe; inflation concern leading to dovish outlook by the central banks. Yields are coming down across markets

- Fiscal difficulties faced by the Indian economy

- Geopolitical tensions may lead to volatility in crude oil prices. This in turn may impact the currency

- Indian economy is facing a soft patch with slowdown in consumption


Microeconomic environment in the economy has turned benign. Expectation of lower inflation, lower interest rates, lower current account deficit and lower fiscal deficit may lead to better and sustainable earnings growth in the medium term. Nifty earnings growth is expected to be in high teens in FY20 on the back of corporate tax reduction and low teens in FY21. Maximum growth is expected to come from domestic-oriented sectors like cement, construction, engineering and financials. The normalisation of earnings may also happen in PSU Banks and corporate-oriented private sector banks.

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At a Nifty level of 11400, the market is quoting at 17.5 times one year forward earnings, which is slightly higher than the average valuations of the last five years. Hence, market is neither cheap nor expensive. The downside risk to the market may appear to be limited in the medium term on account of declining yields and benign microeconomic environment.

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