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.
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Motilal Oswal Dynamic Fund (Div-A) - 10.0795Motilal Oswal Dynamic Fund (Div-Q) - 9.9015Motilal Oswal Dynamic Fund (G) - 10.7154Motilal Oswal Dynamic Fund-Dir (Div-A) - 10.2275Motilal Oswal Dynamic Fund-Dir (Div-Q) - 9.8802Motilal Oswal Dynamic Fund-Dir (G) - 11.1415Motilal Oswal Equity Hybrid Fund - Direct (G) - 9.3868Motilal Oswal Equity Hybrid Fund - Regular (G) - 9.1649Motilal Oswal Focused 25 Fund - Direct (D) - 13.2077Motilal Oswal Focused 25 Fund - Direct (G) - 19.2398Motilal Oswal Focused 25 Fund (D) - 12.0742Motilal Oswal Focused 25 Fund (G) - 17.523Motilal Oswal Large and Midcap Fund - Dir (D) - 7.452Motilal Oswal Large and Midcap Fund - Dir (G) - 7.452Motilal Oswal Large and Midcap Fund (D) - 7.3933Motilal Oswal Large and Midcap Fund (G) - 7.3933Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0098Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0354Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0088Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0058Motilal Oswal Liquid Fund - Direct (G) - 10.7044Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0093Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0351Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.3602Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.013Motilal Oswal Liquid Fund - Regular (G) - 10.6838Motilal Oswal Long Term Equity Fund (D) - 11.2351Motilal Oswal Long Term Equity Fund (G) - 12.6796Motilal Oswal Long Term Equity Fund -Dir (D) - 12.1126Motilal Oswal Long Term Equity Fund -Dir (G) - 13.5989Motilal Oswal Midcap 30 Fund (D) - 13.0073Motilal Oswal Midcap 30 Fund (G) - 18.2077Motilal Oswal Midcap 30 Fund-Dir (D) - 13.2861Motilal Oswal Midcap 30 Fund-Dir (G) - 19.6403Motilal Oswal Multicap 35 Fund (D) - 16.1173Motilal Oswal Multicap 35 Fund (G) - 18.2941Motilal Oswal Multicap 35 Fund-Dir(D) - 16.0985Motilal Oswal Multicap 35 Fund-Dir(G) - 19.3556Motilal Oswal Nasdaq 100 FOF - Direct (G) - 12.4074Motilal Oswal Nasdaq 100 FOF - Regular (G) - 12.3409Motilal Oswal Nifty 50 Index Fund - Direct (G) - 6.6698Motilal Oswal Nifty 50 Index Fund (G) - 6.662Motilal Oswal Nifty 500 Fund - Direct (G) - 7.5177Motilal Oswal Nifty 500 Fund (G) - 7.4897Motilal Oswal Nifty Bank Index Fund - Direct (G) - 6.3574Motilal Oswal Nifty Bank Index Fund (G) - 6.3342Motilal Oswal Nifty Midcap 150 Index Fund (G) - 7.7509Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 7.7798Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 7.2495Motilal Oswal Nifty Next 50 Index Fund (G) - 7.236Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 7.0413Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 7.0679Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 9.5031Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 9.5209Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 9.5099Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 9.6466Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 9.5137Motilal Oswal Ultra Short Term Fund - Dir (G) - 13.4652Motilal Oswal Ultra Short Term Fund (Div-D) - 9.5066Motilal Oswal Ultra Short Term Fund (Div-F) - 9.5165Motilal Oswal Ultra Short Term Fund (Div-M) - 9.507Motilal Oswal Ultra Short Term Fund (Div-Q) - 9.6453Motilal Oswal Ultra Short Term Fund (Div-W) - 9.5099Motilal Oswal Ultra Short Term Fund (G) - 13.0937

My perspectives - concerns and queries in a falling market

Blog Blog Details
  • March 19, 2020
  • Mr. Aashish Somaiyaa|
  • MD & CEO
Dear investors and my dear advisor friends,

I have been writing to you practically every once in 2 to 3 months since many years now. Whatever I write is presented as the CEO speak in our PMS and Mutual Fund newsletters. All my articles or letters to you and even some of my well-received newspaper and media articles are reproduced on our website under my blog:


Usually whatever I write emerges from my meetings with clients and intermediaries. And this is mostly related to my observations about trends, economy, markets and most importantly investor’s feelings and behaviours at a point in time.

There are some months in between when I don’t write and our product and communications team, visibly agitated with me reproduces previous months article on the front page of our PMS and Mutual Fund newsletters. That’s because in some of these months I tell them I haven’t come across much new, please just reproduce the previous one. There are two advantages to this:

1.    I write from my heart what I gather after my interactions and what I think needs perspective or discussions. No one suggests a topic to me, no one shadow writes for me and I am not forced to cook up something. We only present views and I am not forced to give you news. 

2.    I know for a fact that many people don’t read at all. Which means if I write new content every month, in any case a lot of people anyway read it once in a while so if I sincerely wish that people read what I write, there is benefit in repeating it two-three times.

The flip-side is that some people who follow what I write, get irritated to see content being rehashed. I apologise to them, but I invite them to follow my blog on the website, because that has few more content pieces than just the PMS Communique or MF FactSheet.

Coming to my thoughts right now...

You must be hearing a lot of perspectives from various quarters and you must be getting a lot of information so I don’t want to labour you with more. I will keep this down to a few brief points.

1.    First things first, if you do not want to or do not feel like investing at this juncture, it’s perfect. Do what you are comfortable with. Keep liquidity, let the situations evolve.
a.    But, DO NOT REDEEM.
b.    You will regret it, and that day will not be in a few years, it will be few months or few quarters down the line.

2.    Your willingness to believe investment professionals like me will be low right now. That’s because 2018 and 2019 was not a great scenario if you were a small and / or midcap investor and no returns were made. Lack of belief is natural but your current level of belief unfortunately has no correlation with your future returns – if at all, it is likely to be inversely correlated.
a.    We have been telling you all along what is written in point no. 1a above.
b.    We had just about begun to see a sharp recovery and run up from Sep 2019 till mid Feb 2020. Basis strong efforts from the Government and the RBI (tax cuts, rate cuts, huge liquidity - expansionary fiscal policy, monetary and credit policy) and early economic indicators there was a belief that our economy was in process of bottoming out
c.    That’s when Covid-19 awareness hit world markets real hard and in the last 1 month we have been aping western markets. 
d.    There is uncertainty about the fallout on India at the time of writing this but we need to be mindful of damage done to markets already in anticipation. We are already at below 55% market cap to GDP as I write this.
e.    South Korea which has supposedly overcome the coronavirus is also 33% down YTD in USD terms, that’s equal to Nifty 50. This is not about India. 

3.    High quality stocks across small cap, mid cap and large cap; everything is available on a fire sale. 
a.    Somewhere some monkeys have decided to throw their caps (not without a reason), so all monkeys are throwing their caps (without understanding all the reasons). Please take your notes on which caps you like, do not participate in the circus.
b.    We all have seen this act in 2003, 2008, 2013, we are seeing it again. I don’t mean to belittle the situation, it is concerning but I am only saying it has happened in past. May 2006 which is not even counted as a landmark, was a month where midcap index fell 40%.
c.    This is not the time to compare a good investment, a bad investment, what is right and what is wrong and whose cap was nice enough to keep and whose cap deserved to be thrown anyway. Pretty much everything is painted in the same brush; equity is bad right now - period. 
d.    Market has lost the ability to distinguish what is good and what is not good. Everything is falling, some a little more some a little less. But when market hits a point of deep panic, everything will fall as much. At such times people lose their ability to be discerning.

4.    There is the coronavirus which is clearly the unknown variable which is causing the fear and the panic. So there is the human angle and related stress. But there is the economy – since we need social distancing to defeat the virus, we need to ensure economic activity comes to a stop for few days. 
a.    The way central banks and Governments are behaving is two steps ahead. 
b.    It is now a well-known fact that for one or two quarters – different durations, different timelines in different geographies – the world will have very low growth or no growth. 
c.    It is also a well-known fact that the coronavirus infects a fraction of the population and it causes severe harm to an even smaller fraction; it is important to keep the fraction as minimal as possible which is why the world has to slow down. The percentages and the types of impact of the virus are in public media; I am not an expert so I will not venture in that area.
d.    Suffice is to say, the world is right now grappling to assess the total impact of a stoppage of economic activity for some months.
e.    Does this deserve a 30-40% decline in the total market capitalization of the world or 50-60% decline in market value of some of India’s best performing companies? We are basically saying that this stoppage of a quarter or two should mean that the current value of entire future earnings power of all companies globally will reduce by 30-40-50%. Think about that. 
f.    Usually, we have a bear case, a base case and a bull case. Here we seem to have only “world will come to an end” case and “world will not come to an end” case. Our judgement as investors is badly impacted right now; but I don’t think the choices on the table were as lucid or as clear ever.
g.    The central bankers and Governments know economies are going to be impacted, we will eventually come out of the panic of the virus, tacking that is a separate agenda but as and when that subsides, they do not want the economy to go into slumber for a long period of time. Which is why there are aggressive announcements on liquidity infusion, rate cuts and incentives for consumers. Even before this started our own Government and RBI in some form have been on an expansionary path.
h.    The communication seems to be, when we get onto the other side of this medical hazard which we eventually will, we want to ensure things come back to normalcy and businesses and consumers face as low stress as possible.

5.    Never sell when / because foreigners are selling. They are selling for their own set of reasons. They are selling all over the world, they are not selling because India is bad. 
a.    I have seen this in 2008. They sold in 2008 and we panicked. In 2009 and 2010 after our markets fell and currency depreciated, they bought back everything and more. Till date we have not seen the kind of inflows that we saw in 2009 and 2010.
b.    The data is below:

S No.

Year

Net Equity Inflows
(USD bn)

Year Start Exchange Rate

Year-end Exchange Rate

Depreciation (+ve)

1

2008

-11.91

39.42

48.68

23%

2

2009

17.56

48.68

46.53

-4%

3

2010

29.41

46.53

44.71

-4%

4

2011

-0.33

44.71

53.11

19%

5

2012

24.39

53.11

54.79

3%

6

2013

19.98

54.79

61.89

13%

7

2014

16.03

61.89

63.18

2%

8

2015

3.12

63.18

66.22

5%

9

2016

3.24

66.22

67.97

3%

10

2017

7.88

67.97

63.84

-6%

11

2018

-4.33

63.84

69.57

9%

12

2019

14.40

69.57

71.23

2%

13

YTD*

-1.16

71.23

73.88

4%

*YTD numbers up to 13-Mar-2020
Source: NSDL (for FPI Flows) and Bloomberg (for Exchange Rates)

If you choose to invest and take benefit of this fire sale, stagger your investments over the next 3 months. We suggest not to look for new new products; rather to keep adding to whatever you are already invested in.

Thank you for your kind patronage and patience. 

And finally everything is not about markets and investing. Stay safe. I wish you and your families the best of health and happiness at all times. 

Disclaimer: The above graph and table are used to explain the concept and are for illustration and information purposes only and should not be used for development or implementation of an investment strategy. Past performance may or may not be sustained in future.

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