Euphoria on Dalal Street draws warning from top-performing fund of 2023
The chief investment officer at Nippon Life India Asset Management Ltd. says it’s increasingly difficult to find opportunities in the $3.8 trillion market, where benchmarks have just hit record highs.
That’s after a focus on high-conviction bets at reasonable prices helped place three of his firm’s equity funds among this year’s 10 top-performing Indian mutual funds, the strongest showing among peers.
“You are in a market where if you think about a stock from an investment point of view, it rises 40% before you even decide to buy it,” Bhan told Bloomberg News in an interview at his Mumbai office. “That is clearly reflective of froth,” said Bhan, who oversees the equivalent of $17.4 billion in equity assets under management.
Bhan, a graduate in genetics with a masters degree in business administration, is particularly worried about the boom in small- and mid-cap stocks.
His comments come as some strategists have been sounding alarms over the relentless surge in these shares, which is driven in part by India’s retail investing boom.
The Nifty Smallcap Index and the Nifty Midcap Index have each jumped about 30% year-to-date. The benchmark NSE Nifty 50 Index has risen over 11%, beating broader gauges of Asian and emerging-market stocks by at least six percentage points.
Global funds piled a net $17 billion into the nation’s equities in the first eight months of this year as optimism over growth in the economy and corporate earnings, along with persistent weakness in China, boosted the market’s appeal.
