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Earnings growth to determine the future course of Indian market, says TVF Capital

Updated : June 19, 2019 12:13 PM IST

Shiv Puri, the founder & Managing Director at TVF Capital Advisors, is of the view that the future growth of the market, the inflows are dependent on the underlying earnings growth.

“Over the last 10-years the earnings growth has been in mid-to-high single digits and market returns were in mid to high single digits. If one were to look 10 years previous to that the earnings growth was in high teens and early 20’s and that was what the market return was over the ten years,” Puri told CNBC-TV18 on Wednesday.

“The key thing that was holding back fund flows from investors last year or so, was not only the reforms and the impact on economic growth but political element and that got decisively sorted in May. So the way forward is largely going to depend on how earnings growth pans out,” he said.

When asked how one should build their portfolio, he said, "It is a challenging local and global environment. Locally, the environment has been deflationary for the last three-five years on the back of reforms like RERA, GST, IBC etc. These reforms are deflationary in nature, they suck out liquidity and cash from the system and in addition, we had a tight monetary policy. Combination of all this led to a slowdown in economic growth."

With regards to the investment ideas, he said, “One of my favourite gurus Charlie Munger said that the whole idea of investing is to find places where it is safe and wise to not diversify and there is a lot of history in India that shows where those places are. Within these big areas where it is safe and wise to not diversify there are pockets of individual opportunities,” he said, adding that some of these areas could be private sector banks, financial services but the key would be to partner with the right people."
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