Rely on fundamental research

A chartered accountant, Pankaj Murarka has more than 21 years of experience in equity research & fund management, with a credible track record. He started his career with UTI as a research analyst. He also had successful stints with Merrill Lynch as portfolio manager, with Rakesh Jhunjhunwala-owned Rare Enterprises as head of research & fund manager, and with Axis Mutual Fund as chief investor officer. Later, Murarka floated his own venture, Renaissance Investment Managers, an equity-focused investment house managing customer assets on the alternate investment platform. Under Murarka’s stewardship, Renaissance Investment Managers manages client assets under the portfolio management schemes and alternate investment funds and has recently unveiled its Category III AIF Fund.

Murarka thinks that the main concern for the market at this point in time is crude oil price and rupee depreciation. Rising crude oil prices adversely affects India’s current account deficit, leads to input cost inflation across industries and increases the subsidy burden on government finances. India being a net importer of crude, any significant spike in crude oil prices leads to depreciation in the rupee. Also, high currency volatility affects market sentiment.

He firmly believes that India’s real economy is recovering and its investment cycle is making a gradual comeback. Public investments are accelerating at the central and state government levels and a healthy recovery is happening in industrial capex. Besides, the ensuing polls should result in increased spending by the government in rural areas along with an increased thrust on investment projects.

If Murarka is to be believed, growth has started to return. The sectors that would benefit from this growth include manufacturing, engineering, capital goods, media (both online and broadcasters) and hospitality.

Investment strategy

Murarka and his team rely exclusively on fundamental research for investment decision. Investors, he believes, should follow a disciplined investment process. While near-term issues might increase market volatility, the long-term fundamentals of the economy is intact. Long-term investors should use the current market volatility at add good quality franchisees when they come to reasonable valuations.

Murarka is now keeping off the consumer staples as valuations have become unfavourable in that space. “We are also avoiding NBFCs as we expect the bank funding to NBFCs to dry up and asset quality to worsen in this space”.

He says many opportunities are emerging in the alternate investment space. Markets are evolving and sophisticated investors have started looking for more customised portfolios.

In hedge funds, he says, one can take the absolute return approach compared to mutual funds which are measured on relative terms for investing.