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Aditya Birla Sun Life AMC Limited

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    Outlook for India supported by strong fundamentals

    Transcript

    Jul 21, 2023
    2 Mins Read
    A. Balasubramanian

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    Indian economy is intrinsically better placed


    As we enter the second quarter of this financial year, the macroeconomic outlook for India remains broadly positive. India has prospered against the backdrop of muted global growth, maintaining its position as one of the fastest-growing economies in the world. Most global and domestic forecasters predict healthy growth in the range of 6-6.5%.

    The positive sentiment is supported by strong fundamentals. These include a healthy GDP print for FY23, a narrowing current account and fiscal deficit, moderation in inflation, a stable interest rate, robust tax collections, increasing foreign exchange reserves, a steady manufacturing PMI, better capacity utilization, lower NPAs, an improvement in credit culture with higher repayment intent, and rising tax collections. These are all positive indicators for the economy to sustain its growth momentum. The government's emphasis on infrastructure development, digital transformation, and reforms in various sectors bodes well for the economy. Our economy is intrinsically better placed, mainly because of its reliance on domestic demand, supportive demographics, political stability with a progressive reform agenda by the government and domestic manufacturing getting a boost from the China+1 strategy.


    Global economy remains uncertain with a prolonged fight against inflation


    The uneven distribution of rainfall across the country may have repercussions on agricultural output, which could lead to fluctuations in food prices. Rural recovery, a further uptick in consumer sentiment, and commodity prices cooling off from their previous highs are some important factors to be taken into consideration for ensuring that the growth is sustainable. The optimism around India is positive for markets and we have been seeing FII flows coming back. But we also need to be watchful of the dynamics playing out outside the country, what with the global economy remaining uncertain with the fight against inflation turning out to be a prolonged one. While expected to grow, the global economy faces issues such as elevated though moderating inflation, supply chain disruptions and constraints, tighter financial conditions, high commodity prices and lingering geopolitical conflicts. Fed has indicated that further rate hikes are still likely in the future after taking a pause in June 2023. Globally from a growth perspective, developed economies will continue to be on a tightrope walk, balancing inflationary pressures on one hand and economic recovery on the other.


    The Reserve Bank of India will need to strike a delicate balance between supporting growth and containing inflation through its monetary policy measures. After closely monitoring the economic situation, the central bank may maintain an accommodative stance to support growth. However, any signs of significant inflationary pressures may prompt tightening measures to ensure price stability. The government's fiscal policy stance will also play a crucial role in supporting economic recovery. Efforts to maintain fiscal discipline, streamline expenditure, and attract private investment will be important for sustaining the growth momentum. Reforms in taxation, subsidies and public spending will be critical to ensure a stable fiscal outlook.


    All-season investment mantras


    The Indian equity markets have been reaching new highs, driven by overall positive sentiments and participation from both DIIs and FIIs. However, market highs should be considered as just another milestone, and not a cue to liquidate your portfolio or redeem. Don't be driven by the fear that this is the last of the market highs. This wasn't the first, and it won't be the last. In fact, the market reached another all-time high in June 2023. This means that in the long run, the index tends to display a rising upward trend, even if there are short-term fluctuations. At such times, SIP can prove to be a very effective tool to navigate through these fluctuations and can help in maintaining one's investment discipline. One should continue on the path of disciplined investment while compounding and value cost averaging do their work in the background through market highs and lows.


    Another important and never-to-be-forgotten mantra for an investor in any given market scenario is asset allocation. It encourages the habit of spreading one’s investments across different asset classes such as equity, debt, gold etc. To further help citizens understand the importance of this concept, we recently launched our investor education campaign around this. It tries to drive home the point that different asset classes act differently at any given point in time. When you harness the power of multi-asset allocation, you manage to move through market volatility effectively. We hope this endeavour simplifies an important concept of investing. We are dedicated to providing you with more than just the appropriate investment solutions. We also strive to educate you with valuable investment knowledge to support your investment journey. We are always here to serve you.


    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

    A. Balasubramanian

    About Author

    Mr. A. Balasubramanian is the Managing Director & CEO of Aditya Birla Sun Life AMC Limited. A stalwart of the mutual fund industry, he brings with him over three decades of rich experience.

    He has been associated with the organisation since 1994. Prior to assuming the role of the CEO in 2009, Mr. Balasubramanian served as Chief Investment Officer from 2006 to 2009. As Managing Director & CEO, Mr. Balasubramanian oversees Rs. 3 lakh crore in Assets Under Management at Aditya Birla Sun Life AMC. Before joining ABSLAMC in the year 1994, he worked with GIC Mutual Fund, Can Bank Financial Services and Pandit & Co. between 1989 and 1994.

    Mr. Balasubramanian has been awarded CEO of the Year title by Asia Asset Management in 2018 and 2020. He has been awarded Chairman’s Individual Award by The Aditya Birla group for being an Outstanding Leader in 2015 and for being a Leader of Leaders in 2018.

    Mr. Balasubramanian is closely associated with key industry bodies. He has been on the board of AMFI (Association of Mutual Funds in India) since 2009 and was the Vice Chairman of AMFI in 2015-2016. He has served as the Chairman of AMFI for two terms, from 2016-2018, and reappointed for the period of 2021 – 2023. He is also the ex-officio Chairman of AMFI’s Financial Literacy Committee. Mr. Balasubramanian is also an esteemed member of the Fund Management Advisory Committee of the International Financial Services Centres Authority (IFSCA). The committee will be advising IFSCA in laying down a long-term plan for the orderly growth and development of the fund management industry in IFSC. He is also a Governor on the Board of Governors of the National Institute of Securities Markets (NISM), and member of the advisory committee of the SEBI Investor Protection and Education Fund (IPEF).

    He has completed advanced management programs from Indian Institute of Management, Bangalore and Harvard Business School. He also holds a bachelor’s degree in science (mathematics) and a master’s degree in business administration from GlobalNxt University.

    Mr. Balasubramanian is involved with philanthropic work through various charitable organisations. He is actively engaged in initiatives towards Mother & Child healthcare and supporting Indian Art & Culture. He is one of the active members at Sathya Sai Sanjeevani Centre for Child Heart Care. He is also associated with Sathya Sai University, Gulbarga that imparts knowledge on Human Excellence to students during their higher education. He promotes Indian Arts and Village Traditional Culture by being a Trustee at Melattur Bhagavata Mela Foundation.

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