Equities can give 15-17% returns over medium term: Vijai Mantri, Pramerica Mutual Fund

In an interview with ET Now, Vijai Mantri, MD & CEO, Pramerica Mutual Fund, shares his views on the market. Excerpts:

ET Now: Let me give you options. Option number one earnings, option number two Fed, option number three valuations pick and choose. What do you want to start with?

Vijai Mantri: The fundamentals are looking pretty decent. The earning results what you were expecting actually are out. You were looking for good results to come out in the first half and the not-so-good results in the second half. If you look from a valuation perspective, you were expecting that the valuations are currently at discount to the long term average to the market. So fundamentals are looking very good, but what it is driving the market is global liquidity. So we need to keep an eye on the Fed. All these things are interlinked. So from today’s perspective or from the current situation perspective, if you look at what is going to happen, until and unless the domestic equity participation happens, the market will grow with the growth and profitability of the companies.

ET Now: What do you suppose is leading to the weakness that we are seeing in the Indian currency?

Vijai Mantri: No, I am not an expert on the currency, but it is a very clear sign that the exports are not very competitive and India is not able to push the exports. That is the reason the rupee has actually depreciated because if you look at gold prices and if you look at commodities, we are coming down, inflation is coming down. Macro situation of India is improving. So there is no reason for the rupee to do down the way it has gone down, but we have to do a big struggle to grow our export and we believe that there are structural issues to tackle the exports.

ET Now: I am slightly confused. Should one invest in equity funds or debt funds?

Vijai Mantri: Suppose you are a fixed-term investor, you want to invest for the next 12 months and you are looking at double digit kind of return, then that is one product because there is no other product in the financial market which we will give you that kind of investment performance. But if you want to get more than 10%, which is the desire of every investor, then where do you look at investing money? Would you put money in gold, would you put money into real estate? The answer is not very clear. So in my opinion, equities over the next couple of years would give anything between 15% and 17% kind of investment performance.

ET Now: What do you think is going to really drive the markets and also are you sort of holding your breath for the GDP number that is out on Friday?

Vijai Mantri: Not much. Our view on the GDP was much ahead of the street. We expected GDP to be below 5% or close to 5% number and GDP is more of what has happened in the past, but the market looks at what is going to happen in future. So one of the bigger things one would look at is monsoon and initial indications are that monsoons are going to be very good. We believe because India is largely a domestic consumption story, the stocks which are available at 25 to 30 PE multiples are the stocks which look at getting the majority of revenue from Bharat.