Overall macro situation for India is still superior, says UTI Mutual Fund CIO Vetri Subramaniam

The overall macro situation in India is still superior to what it is in some of the other geographies, says Vetri Subramaniam, Chief Investment Officer, UTI AMC.  

“The longer-term growth prospects in India are looking far better than the rest of the world. In an environment, where the world actually underperforms, I think India will have an advantage but relative performance might not be as strong,” Subramaniam said in an exclusive conversation with Udayan Mukherjee, Global Business Editor, Business Today TV. 

On being asked about the market outlook for 2023, Subramaniam expressed caution over the vulnerability of the Indian markets, saying the street has not priced in cyclical setbacks. He believes that adverse external factors could dent consumer sentiment and impact animal spirits in selected sectors.

Talking about fixed income products, Subramaniam said the opportunity in India’s fixed income is reasonably at an attractive level. Three-year, five-year duration products are reasonably attractive yields. “So, stick with your long-term investment in equities, where you're thinking 10-20 year. But, from an asset allocation perspective, I would urge investors to actually look seriously at medium duration high quality fixed income products."

The market expert further suggested, “If you are getting a positive yield spread of about 200 basis points, you should be looking at fixed income and a tactical repositioning of your portfolio would also be called for, because when we look at equity valuations related to bonds, it's actually the bonds which are looking more attractive today."

On the capex cycle in India, Subramaniam said, there is a little bit of lack of animal spirits among the Indian entrepreneurs. As far as households are concerned, “property has been doing well over the last two years, but if rates push up, I would worry that incremental increases and mortgage rates will dampen some of the interest that has been there. So, I'm not a big bull on capex outcomes over the next few years”, he said.

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