Daily Voice | HSBC AMC's Kailash Kulkarni anticipates that the market would continue to rise in FY2025 as well

Daily Voice | HSBC AMC's Kailash Kulkarni anticipates that the market would continue to rise in FY2025 as well

According to Kulkarni, the picture for FY25 is still bright because of reforms that prioritize building infrastructure and increasing manufacturing in addition to consistent contributions from domestic institutional investors and FIIs.

The Chief Operating Officer as well as Associate Director of HSBC Asset Management Company (India) is Kailash Kulkarni.

The CEO and Associate Director of HSBC Asset Management Company (India), Kailash Kulkarni, anticipates that the market will continue to perform strongly in FY2025.

Although many analysts do not anticipate a repetition of the market's record performance in FY2014, Kulkarni reminded Moneycontrol in an interview that India presents a compelling narrative and a chance for investors to make money.

Kulkarni, who has over 20 years of asset management expertise, said that automation and digital transformation provide a plethora of possibilities. Adapted quotes from the conversation:

Having gained more than 25% in FY2014, do you think stocks will have another great year in FY2015?

Over the last several years, the Indian economy has shown a robust growth pace. The prognosis is still favorable with consistent investments from foreign institutional investors (FIIs) and domestic institutional investors, propelled by robust income growth and continuing government reforms that prioritize the development of India's infrastructure and industrial sector.

We anticipate that the Indian equities markets will continue to witness robust expansion until 2024.

The general tendency is still upward, notwithstanding the possibility of sporadic turbulence. For years, India has been enticing investors with the possibility of creating substantial riches.

Do you anticipate any significant market hurdles in FY25?

According to us, the growing geopolitical and economic uncertainties continue to make the global macro situation difficult. But now that inflation is under control, the US Federal Reserve may decide to lower interest rates in the future.

With GDP growth of 7.6% in Q2FY24, India's economic narrative is still thriving thanks to robust government expenditure and rising investments in the manufacturing and construction sectors. The government has reiterated its commitment to infrastructure development in the Interim Budget 2024. Efforts to lower the budget deficit should also help create a positive environment for domestic rates.

The majority of analysts anticipate rate cuts from the US Federal Reserve in June or during the current year's third quarter. How do you feel?

As expected, the US Federal Reserve maintained the 5.25–5.5 percent federal funds rate target range during its January meeting. The Fed claimed that "the risks to achieving its unemployment and inflation targets are moving toward a better balance" in a statement that had undergone significant changes, but it nevertheless maintained that it was "highly circumspect about inflation risks."

The committee does not believe it would be prudent to decrease the target range until it has more assurance that inflation is gradually approaching 2 percent, even though the Fed currently regards policy as data dependent.

Accordingly, the Fed has said that it is unlikely to drop interest rates in March but has also said that it would be reasonable for it to loosen policy at some time in the next year.

Do you believe the RBI will alter its policy in April and begin lowering repo rates just after the general elections?

Statistics on inflation and economic growth often influence the RBI's policy rate decisions. Anticipatedly, the Reserve Bank of India has maintained the policy repo rate at 6.5% while raising its projections for inflation in FY2025 and FY2024 to 4.5% and 5.4%, respectively.

The Governor clarified the policy position by stating that it should be understood in the context of interest rates, imperfect transmission, and inflation that is still over the 4% objective. The RBI acknowledged the reduction in inflation and pointed out that the ongoing decrease in core inflation was a result of previous monetary policy measures.

It did the out, meanwhile, that uncertainties surrounding food inflation might intensify pressures on prices generally and sabotage the current process of disinflation. It was noteworthy to see that one of the MPC members voted in favor of a rate drop, despite the RBI's anticipated attempts to balance the policy.

China does not do well at all. Do you think the second-biggest economy in the world will rebound in the next fiscal year?

China underperformed, with mood remaining weak despite solid profit growth. As a result, Chinese officials announced fresh initiatives last week to boost share prices and stabilize confidence. Mixed official PMI numbers in China kept pointing to a low level of morale. Although it increased to 49.2 in January, the manufacturing PMI was still in contraction zone for the fourth straight month.

The non-manufacturing index rose from 50.4 to 50.7 in the previous month.Completed, which has a rebound in the services activity barometer and is marginally beyond market expectation. Concerns over China's macro outlook and current geopolitical tensions led to a fall in Chinese markets. Wider uncertainties, geopolitics, margin erosion, and earnings fall are still major hazards, but further policy implementation in China is probably going to keep the economic momentum going, and the central bank may be able to provide some help.

Do you believe that automation, digitalization, and infrastructure are now popular investment themes?

Automation and digital transformation, in my opinion, provide enormous prospects and are very necessary for all industries. Innovative technologies are transforming goods and radically altering the landscape of labor, business, and life in general.

The newest developments in linked technologies and artificial intelligence (AI) are extending the reach of the digital revolution. In addition to altering business structures, the pandemic's quick embrace of digital technology also brought out new chances for innovation and expansion.

The government's aggressive drive for infrastructure expenditure is undoubtedly helping the economy and has been a major factor in the GDP growth of H1FY24.

How do you differentiate yourself from other products of this kind and what is your approach for the HSBC Multi Asset Allocation Fund?

Compared to other standalone stock investing choices, the HSBC Multi Asset mix Fund strives to produce a well-balanced portfolio with reduced volatility via the careful mix of equity, debt, gold, and silver ETFs. Our goal is to offer relative value via a mix of top-down and bottom-up techniques, supported by thorough research, while maintaining cautious diversification.

Which subjects are the most interesting to you?

Key industries like manufacturing, infrastructure, electricity, and finance have a bright future ahead of them because of programs like Made in India and growing trends in discretionary spending. Infrastructural development and persistent domestic demand are driving small and medium-sized businesses, which is why mid- and small-cap funds are more successful.

Purchasing high-quality small- and mid-cap firms has shown to be lucrative, making the argument for long-term investment compelling. Small and mid-cap funds are better suited for investors with a greater tolerance for risk, while multi-cap/flexi-cap and multi-asset allocation funds may help lower volatility. Along with expenditures targeted toward the economy's cyclical development, assistance for banking and infrastructure should not end.

Regarding fixed income, we anticipate that funds with tenures of three to five years, as well as shorter durations such extreme short term and low duration, would be the main emphasis.