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) - 9.9592Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive (G) - 10.6534Motilal Oswal Asset Allocation Passive Fund of Fund – Aggressive-Dir (G) - 10.7332Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative (G) - 10.527Motilal Oswal Asset Allocation Passive Fund of Fund – Conservative-Dir(G) - 10.6092Motilal Oswal Dynamic Fund (Div-A) - 11.9698Motilal Oswal Dynamic Fund (Div-Q) - 10.5136Motilal Oswal Dynamic Fund (G) - 14.0408Motilal Oswal Dynamic Fund-Dir (Div-A) - 12.2869Motilal Oswal Dynamic Fund-Dir (Div-Q) - 10.8157Motilal Oswal Dynamic Fund-Dir (G) - 15.0187Motilal Oswal Equity Hybrid Fund - Direct (G) - 14.8712Motilal Oswal Equity Hybrid Fund - Regular (G) - 13.9931Motilal Oswal Flexi Cap Fund(D) - 20.9632Motilal Oswal Flexi Cap Fund(G) - 29.9237Motilal Oswal Flexi Cap Fund-Dir(D) - 21.175Motilal Oswal Flexi Cap Fund-Dir(G) - 32.3121Motilal Oswal Focused 25 Fund - Direct (D) - 18.1033Motilal Oswal Focused 25 Fund - Direct (G) - 33.1693Motilal Oswal Focused 25 Fund (D) - 16.0845Motilal Oswal Focused 25 Fund (G) - 29.3929Motilal Oswal Large and Midcap Fund - Dir (D) - 13.8546Motilal Oswal Large and Midcap Fund - Dir (G) - 14.8866Motilal Oswal Large and Midcap Fund (D) - 13.2592Motilal Oswal Large and Midcap Fund (G) - 14.2283Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0087Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0345Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0078Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0103Motilal Oswal Liquid Fund - Direct (G) - 11.4945Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0085Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0343Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0077Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0173Motilal Oswal Liquid Fund - Regular (G) - 11.4338Motilal Oswal Long Term Equity Fund (D) - 16.9139Motilal Oswal Long Term Equity Fund (G) - 23.1172Motilal Oswal Long Term Equity Fund -Dir (D) - 20.3751Motilal Oswal Long Term Equity Fund -Dir (G) - 25.5248Motilal Oswal Midcap 30 Fund (D) - 24.3293Motilal Oswal Midcap 30 Fund (G) - 42.6801Motilal Oswal Midcap 30 Fund-Dir (D) - 25.4259Motilal Oswal Midcap 30 Fund-Dir (G) - 47.2994Motilal Oswal MSCI EAFE Top 100 Select Index Fund (G) - 9.2879Motilal Oswal Multi Asset Fund - Direct (G) - 10.7379Motilal Oswal Multi Asset Fund (G) - 10.4477Motilal Oswal Nifty 200 Momentum 30 Index Fund - Direct (G) - 8.2651Motilal Oswal Nifty 50 Index Fund - Direct (G) - 13.271Motilal Oswal Nifty 50 Index Fund (G) - 13.1331Motilal Oswal Nifty 500 Fund - Direct (G) - 15.2937Motilal Oswal Nifty 500 Fund (G) - 15.0159Motilal Oswal Nifty Bank Index Fund - Direct (G) - 12.2285Motilal Oswal Nifty Bank Index Fund (G) - 12.0001Motilal Oswal Nifty Midcap 150 Index Fund (G) - 17.6914Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 18.0494Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 13.019Motilal Oswal Nifty Next 50 Index Fund (G) - 12.8028Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 17.7904Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 18.134Motilal Oswal S&P 500 Index Fund - Direct (G) - 13.9855Motilal Oswal S&P 500 Index Fund (G) - 13.7937Motilal Oswal S&P BSE Low Volatility Index Fund (G) - 9.8777Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 10.232Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 10.2569Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 10.2391Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 10.3876Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 10.2441Motilal Oswal Ultra Short Term Fund - Dir (G) - 14.4984Motilal Oswal Ultra Short Term Fund (Div-D) - 10.1328Motilal Oswal Ultra Short Term Fund (Div-F) - 10.1451Motilal Oswal Ultra Short Term Fund (Div-M) - 10.1346Motilal Oswal Ultra Short Term Fund (Div-Q) - 10.2806Motilal Oswal Ultra Short Term Fund (Div-W) - 10.1378Motilal Oswal Ultra Short Term Fund (G) - 13.9559

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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