Beware of small caps and regulation, says Indian Fund Manager
Live MintMumbai: With national elections set to potentially shake up Indian markets this year, the $1.5 billion Matthews India Fund has a bit of advice: don’t buy small caps or stocks that are easily influenced by the government. “Large-capitalization stocks currently represent the most attractive part of the Indian stock market as valuations are broadly in line with historical averages and expectations for future growth are achievable,” said Peeyush Mittal, a co-manager of the fund based in San Francisco. The fund, which has returned an average of 15 percent annually over the past five years versus about 12 percent for the S&P BSE 100 Index, also has moved away from industries that are highly regulated or at risk of government intervention. “A government formed with the support of too many small political parties lends itself to instability and dampens the confidence of businesses at large to make the future investments necessary for growth and innovation,” the fund manager wrote in an email.