The top five holdings in its largest fund Quantum Long Term Equity Fund which follows a value approach are HDFC, Infosys, HDFC Bank, Wipro, Mahindra & Mahindra as of November end.
âElevated valuations also mean returns expectation need to be moderated and downside risks are now higher,â said Nilesh Shetty, fund manager, Quantum AMC.
Low interest rates, mortgage rates at a two-decade low and cost control by corporates are some of the reasons for the fund house to be optimistic.
Low mortgage rates coupled with lower real estate prices and reduced transaction charges has improved affordability by 15-20%. Increased real estate transactions, in turn, could drive consumer demand as buyers look to fill up newly purchased homes with consumer durables, home furnishings etc. boosting economic activity
The fund manager believes interest rates staying at 6% are very attractive than yields on offer in the western world. If oil prices remain low, the rupee may not see sharp depreciation, making Indian fixed income yields attractive to global pension funds searching for yield. âIndia could potentially draw significant flows from this pool, which if channelled correctly can keep domestic interest rates low and act as an economic multiplier,â said Shetty.
Corporate India, experiencing an economic slowdown, has been focused on driving efficiency and controlling costs. A small rebound in demand can result in profits rising faster than revenues.