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Aditya Birla Sun Life AMC Limited

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    Aditya Birla Sun Life AMC Limited

    CEO Quarterly Message-FY 23 Q3

    ADITYA BIRLA CAPITAL MUTUAL FUNDS

    Investor Message - FY23 Q3
    In this edition of ON POINT, let me take the opportunity to wish each one of you a very Happy and Prosperous Diwali and New Year. I am a firm believer in one segment of the business picking up, which is the celebration of festivals, as the economy opens in the post-pandemic era. Last two years there was muted celebration in every family and every household. I see this coming back to normal. I am hopeful these festivities will bring in positive sentiment for businesses and drive economic growth to the next level. I have highlighted my thoughts on how India has managed to outperform amidst global uncertainty.

    Global Economic Outlook


    In this edition of the podcast, I have highlighted the global factors impacting markets & my thoughts on the Indian economy going forward.

    During the last quarter, the global backdrop only worsened with inflation being sticky along with the continued rise in interest rates. Equity market volatility continued to be elevated through the quarter even though commodity prices cooled off due to a variety of reasons. The foreign money flows into Indian equities have reduced on the back of allocation towards equities. Developed markets like the US, Europe and even China will continue to have their struggles and that will keep the volatility in the equity market at higher levels. At the same time, it will make policymakers to be more alert and continue to take possible decisions to bring down inflation and get growth back on track.

    Interest rates trend


    The federal reserve officials have made it clear that the rate hike cycle will not stop until inflation is brought under control. This essentially means the market is building expectation for more rate hikes which would take the terminal rate to 4.5-4.6 percent. Therefore, the market is pricing in subsequent rate hikes in the coming policy meetings.

    Central Bank actions


    Reserve Bank of India has managed the situation seamlessly despite the aggressive rate hike cycle in the developed world. The rate hike cycle has been relatively moderate in India. The resilience of India’s inflation has also been superior as compared to the developed economies along with the bond yield movements. India’s central bank realised ahead of time as to where the currency should trade and allowed the rupee to depreciate to be in-line with the global market. One can argue that the rupee-dollar should depreciate further given the rise in dollar index. However, the RBI has been conscious that we cannot remain disconnected from the global economy and at the same time there is need for paying attention to the economic growth of India.

    Equity Market is Decoupling


    It is difficult to say if India has decoupled from the rest of the world. At the end of the day, India continues to be a part of the global economy and money is fungible. Therefore, India also depends on foreign flows. India is decoupled in the sense of the growth aspect being met by domestic consumption and spending along with stable inflation and a good monsoon season. The policymaking of the government will continue to remain a strong force. India’s outperformance can be expected to continue keeping in mind high valuations may come in the way as beyond a point it may become costly on a relative basis.

    Why choose Pro Investing?


    An investor should view volatility and uncertainty in the market as a friend rather than getting worried about it. The market tends to perform better than what is perceived in the long term. A Pro Investor could stay invested in equity through a mix of large-cap, flexi-cap and balanced advantage funds. That would form a core portfolio for long-term wealth creation. Lastly, the SIP way of investing would remain key to success given the fact that markets keep going up and down but what remains permanent is the goal and purpose of the investment.
    Wishing you all happy investing!
    to get the Podcast message.
    Regards,
    A. Balasubramanian
    Managing Director & CEO
    Aditya Birla Sun Life AMC Limited
    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.