“Right now the market is running essentially on liquidity,” said Chandresh Kumar Nigam, MD and CEO of Axis AMC in an interview with CNBC-TV18.
He advises sticking to asset allocation.
“There is no reason we can justify valuation or prices just on the basis of fundamentals, we are far beyond that. It is a liquidity-driven rally but I think it has got some more legs to run,” he said.
He advises taking some money off the table if one is overinvested. “I think most people are still underweighted as compared to what their targeted asset allocation should be and they should at regular intervals, continue to invest in the market,” he added.
According to him, the nets have changed, so while gross has gone up, the outflows have been fairly muted.
“From a negative position, net outflow in the industry which we saw in the SIP first couple of months in the calendar year, we are now clocking about Rs 22,000-25,000 crore of net flows, that is good for the industry, good for investors and good for markets,” he explained.
“There has been heavy new fund offer (NFO) activity in the market but even otherwise the flows have been very solid,” he said.
“We have seen significant improvement on systematic investment plan (SIP) flows. the balanced or the hybrid category has been gaining some traction over the last three-four months because some set of markets is worried about the way the indices have been moving and these are relatively lower risk products as well as the fact that fund managers have the ability to change equity allocations, make these products right for situations like these where we have seen markets moving up and valuations going high,” he said.
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According to him, if you have a bright set of people, great management with vision and more importantly execution capability, the money will come.
Technology is one space, which one cannot ignore.
“Every part of the economy is supported by technology. Some of them will do well and those who will do well will create a phenomenal amount of wealth and more importantly customer delight which will ultimately create wealth for investors in these companies and some of them will fail and will get absorbed,” he said.
For the full interview, watch the accompanying video.