Indian economy has had a roller-coaster ride: DSP

The markets are at a very interesting crossroads today. There are encouraging demand-pickup trends seen through corporate results this quarter - with key trends including IT stocks seeing scaling up of digital projects; FMCG, discretionary companies highlighting improvement in consumer demand led by rural; cement stocks reporting better-than-expected realization trends and retail private banks seeing strong loan growth. 

However, on aggregate, a select set of companies (corporate banks, pharma) dragged down the overall numbers, Kalpen Parekh, President, DSP BlackRock Mutual Fund, said at a meet here on Thursday.

“We have weak macro trends such as rising Current Account Deficit (CAD), oil prices, bond yields, inflation and a falling rupee. The macro trends weren’t always bad though,” he said, citing the instances of a controlled fiscal deficit and CAD and inflation hitting lows since 2014, when the Modi government came into power.

Credit growth in the economy is pegged at 13% whilst deposit growth at 8% implying higher demand for deposits to fund credit. Herein the saver stands to benefit from elevated rates especially in the current phase of interest cycle wherein the spread between the deposit rates and the inflation is relatively higher than in the past cycle of higher interest rates, Parekh said. 

“We remain underweight on bonds maintaining low duration across funds. We continue to recommend fixed income investments to be apportioned in close ended as well as open ended funds. This not only helps to earn higher accruals (Fixed Maturity Plan) but allocations in open ended funds operating at lower duration profile stand to benefit from the roll down of the maturity,” Vinit Sambre, Head of Equities, noted.

The DSP Group recently bought out BlackRock’s 40% stake in DSP BlackRock Investment Managers Pvt Ltd. The reason for this is that the DSP Group did not want to reduce its footprint in the asset management business. BlackRock’s approach is to have a global integrated technology and operating model and therefore they expressed a desire to have a controlling stake in the company. 

BlackRock respected the DSP Group’s 152-year-old legacy and a desire to retain a controlling stake. DSP BlackRock manages/advices assets over Rs 1,10,000 crore ($ 16.5 billion) across equity, fixed income and alternatives (as on 30th April 2018) with over 2 million individual investors.