Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
Motilal Oswal 5 Year G-Sec Fund of Fund (G) - 9.9693Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 10.5908Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 10.6702Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.4989Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 10.581Motilal Oswal Dynamic Fund (Div-A) - 11.9139Motilal Oswal Dynamic Fund (Div-Q) - 10.4646Motilal Oswal Dynamic Fund (G) - 13.9753Motilal Oswal Dynamic Fund-Dir (Div-A) - 12.23Motilal Oswal Dynamic Fund-Dir (Div-Q) - 10.7656Motilal Oswal Dynamic Fund-Dir (G) - 14.9491Motilal Oswal Equity Hybrid Fund - Direct (G) - 14.8467Motilal Oswal Equity Hybrid Fund - Regular (G) - 13.9695Motilal Oswal Flexi Cap Fund(D) - 20.8452Motilal Oswal Flexi Cap Fund(G) - 29.7553Motilal Oswal Flexi Cap Fund-Dir(D) - 21.0562Motilal Oswal Flexi Cap Fund-Dir(G) - 32.1309Motilal Oswal Focused 25 Fund - Direct (D) - 18.0612Motilal Oswal Focused 25 Fund - Direct (G) - 33.0921Motilal Oswal Focused 25 Fund (D) - 16.0466Motilal Oswal Focused 25 Fund (G) - 29.3237Motilal Oswal Large and Midcap Fund - Dir (D) - 13.7157Motilal Oswal Large and Midcap Fund - Dir (G) - 14.7373Motilal Oswal Large and Midcap Fund (D) - 13.1258Motilal Oswal Large and Midcap Fund (G) - 14.0851Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.01Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0358Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0091Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0116Motilal Oswal Liquid Fund - Direct (G) - 11.4959Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0097Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0355Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0089Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0185Motilal Oswal Liquid Fund - Regular (G) - 11.4352Motilal Oswal Long Term Equity Fund (D) - 16.7162Motilal Oswal Long Term Equity Fund (G) - 22.8471Motilal Oswal Long Term Equity Fund -Dir (D) - 20.1376Motilal Oswal Long Term Equity Fund -Dir (G) - 25.2273Motilal Oswal Midcap 30 Fund (D) - 24.2286Motilal Oswal Midcap 30 Fund (G) - 42.5035Motilal Oswal Midcap 30 Fund-Dir (D) - 25.3215Motilal Oswal Midcap 30 Fund-Dir (G) - 47.1051Motilal Oswal MSCI EAFE Top 100 Select Index Fund (G) - 9.26Motilal Oswal Multi Asset Fund - Direct (G) - 10.6957Motilal Oswal Multi Asset Fund (G) - 10.4063Motilal Oswal Nasdaq 100 FOF - Direct (G) - 19.2416Motilal Oswal Nasdaq 100 FOF - Regular (G) - 18.9676Motilal Oswal Nifty 200 Momentum 30 Index Fund - Direct (G) - 8.1626Motilal Oswal Nifty 50 Index Fund - Direct (G) - 13.2283Motilal Oswal Nifty 50 Index Fund (G) - 13.0907Motilal Oswal Nifty 500 Fund - Direct (G) - 15.2409Motilal Oswal Nifty 500 Fund (G) - 14.9639Motilal Oswal Nifty Bank Index Fund - Direct (G) - 12.0922Motilal Oswal Nifty Bank Index Fund (G) - 11.8662Motilal Oswal Nifty Midcap 150 Index Fund (G) - 17.6522Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 18.0098Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 12.9281Motilal Oswal Nifty Next 50 Index Fund (G) - 12.7132Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 17.6935Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 18.0355Motilal Oswal S&P 500 Index Fund - Direct (G) - 13.7148Motilal Oswal S&P 500 Index Fund (G) - 13.5265Motilal Oswal S&P BSE Low Volatility Index Fund (G) - 9.7907Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.2334Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.2583Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.2404Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.389Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.2455Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.5003Motilal Oswal Ultra Short Term Fund (Div-D) - 10.134Motilal Oswal Ultra Short Term Fund (Div-F) - 10.1463Motilal Oswal Ultra Short Term Fund (Div-M) - 10.1358Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.2819Motilal Oswal Ultra Short Term Fund (Div-W) - 10.139Motilal Oswal Ultra Short Term Fund (G) - 13.9576

Large caps are shock absorbers to tide volatility

Blog Blog Details
  • September 14, 2021
  • Aditya Khemani|
  • Fund Manager-Equities
With market trading near its all-time high, many investors are confused about whether to invest in large caps or mid & small caps. To find answers to these questions and help investors in making the most of this crest, Money9 spoke to Aditya Khemani, Fund Manager, Motilal Oswal Asset Management Company. Edited excerpts:

With markets quoting at all-time highs is it a good time to book profits or one must stay invested in equities if so why?
Firstly, I would say that investing is a marathon, not a sprint so be patient and use equity as a tool to reach your financial goals. Markets hitting new highs is part of that journey. Equity markets are ultimately a reflection of the economy and in case the economy does well the markets will do well. Last 4-5 years there has been a lot of speed breakers in the economy starting with demonetization, IL&FS credit crisis, short term impact of GST implementation and finally Covid and it is now reasonable to expect the worst is over and the growth in the coming years to some extent should make up for the lost ground. Hence it looks like we are at the start of a strong earnings period for corporate India. The corporate Profit to GDP ratio which typically is in the range of 5% is currently slightly around 2-2.5% indicating that we are at the cyclical bottom as far as earnings are concerned. Hence as one sees strong corporate earnings growth going forward the markets should also do well. Though market returns should be less than earnings growth as some part of higher earnings growth the market has already factored into its valuation. So an existing investor should just stay invested without getting bothered about day to day volatility.

Off late we have seen a trend where large-caps have outperformed mid & small caps. In fact, in August Nifty outperforms the Midcap/Small-cap index for the first time in CY21. Do you foresee this trend continuing?
No one knows the intensity and the timeframe of the current bull market. One of the traits of an evolving bull market is most parts of the economy participate in it. Hence one sees sector leadership changing as there is price exhaustion in that sector. Also one see at points in time large caps do better but again as there is price exhaustion the mid-caps then take on the mantle of taking the markets higher. So after a very strong rally in the mid/small cap, one saw the Nifty do well in the month of August. It is very difficult to anticipate these shorter-term trend change. But as the economic recovery is getting much more broad-based, one should see both the large caps and midcaps participate. Hence I would not say that there is a trend reversal. For an investor what is important is to draw up a balanced allocation between both the large caps and mid/small caps. I would say in case we have to reach our financial goals on time, the large caps will act as shock absorbers to tide over the volatility in that journey and the midcaps give us speed to reach our financial goals on time.

So which sectors are you betting on across large, mid & small caps? What could be the spoiler of the ongoing party in Dalal Street?
India is a very bottom up market and there is money to be made across sectors. But if I have to choose which sector looks more promising, the first would be financials especially the frontline banks and NBFC’s. Banking is the biggest play in macro recovery. Plus we have seen during Covid, the asset quality of frontline banks turned out to be much better than expectations. Secondly, I would also be very bullish on the domestic healthcare market across the value chain including the domestic-focused pharma cos, hospitals and diagnostic chains. The reason being Covid has made us realize the importance of good health and hence spends on healthcare would increase going ahead.

Markets ultimately will do well in case the profit growth is good for corporate India. So in the last 12 months upmove, some part of that higher earnings growth going ahead is already factored into stock prices. So the key challenge would be to live upto expectations and eventually how the earnings cycle pans out will be key. So I would say keep monitoring the high-frequency data points to gauge the health of the economy and corporate India.

The Nifty is trading at premium valuations when it comes to value it on a price to earnings ratio but when it comes to valuing price to book ratio the valuations seem reasonable as it is quoting at around 3.6 times to price to book ratio driven by cheaper valuations of capital intensive sectors. So what do you make sense out of these it and would it be wise to look at valuations by ‘asset approach’?
Looking at the valuations of the market with a 12-month horizon might not do justice at this juncture because the earnings growth projection for a lot of companies might be depressed due to Covid. So one has to remember the big picture that last 4-5 years there were a lot of disruptions with Covid being the mother of all disruptions. And hence the Corporate Profit/GDP ratio is typically around 4-5-5% on average is currently at 2-2.5%. Hence the earnings base is depressed which is optically showing high PE ratios. So on a macro basis where India looks good relatively on most parameters, one could see a string multiyear earnings growth cycle pan out going ahead similar to the 2004-2008 cycle. Hence one should not see just the PE Ratios but take a much broader view on the direction of the economy and markets.

Q1FY22 earnings were in line with street estimates how do you see Q2FY22 earnings panning out and which sectors will be leading from the front in Q2?
It looks like Metals, IT, Pharma results could be good. Plus banking sector asset quality could be better than expectations as the economy has bounced back strongly the last couple of months. Consumer Discretionary numbers could be a bit weak as again Covid has been an impact at the start of the quarter. But I think investors will again look ahead and forgive weak numbers in sectors that have been impacted by Covid.

Going by what was experienced in August where many IPOs were aggressively priced and listed at a discount. Do you see the same trend to continue or companies coming with IPOs will price them reasonably?
On an overall basis, whenever the secondary markets is hot one would see primary issues come at an expensive valuation. And the retail frenzy has added to the strong listing gains seen in a few issues. But one won’t be able to generalize which companies will price their issue aggressively and which ones will leave money on the table. But yes a few bad listings has made the valuations a bit saner for upcoming issues. But we have to remember IPO’s where there is very strong institutional interest due to a unique business model will still come expensive especially in the digital space.

This article was published on on 14th September, 2021

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Thisarticle has been issued on the basis of internal data, publicly availableinformation and other sources believed to be reliable. The informationcontained in this document is for general purposes only and not a completedisclosure of every material fact. The Stocks mentioned herein is forexplaining the concept and shall not be construed as an investment advice toany party. The information / data herein alone is not sufficient and shouldn’tbe used for the development or implementation of an investment strategy. Itshould not be construed as investment advice to any party. All opinions,figures, estimates and data included in this article are as on date. Thearticle does not warrant the completeness or accuracy of the information anddisclaims all liabilities, losses and damages arising out of the use of thisinformation. The statements contained herein may include statements of futureexpectations and other forward-looking statements that are based on our currentviews and assumptions and involve known and unknown risks and uncertaintiesthat could cause actual results, performance or events to differ materiallyfrom those expressed or implied in such statements. Readers shall be fullyresponsible/liable for any decision taken on the basis of this article.Investments are subject to market risks, read all scheme related documentscarefully.

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