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Informist, Tuesday, Apr. 8, 2025

MUMBAI – India is poised to grow faster than other developing economies, despite the threat posed by the newly implemented tariffs on goods exported to the US, Madhu Nair, chief executive officer of Union Mutual Fund said at a press conference here Tuesday. "Our sense is even after all these tariffs, India would be one of the fastest growing economies in the world. Tariffs may cause some bit of a global slowdown which will impact India also, but from a relative perspective I think India will still grow at a healthy rate," Nair said. 

The Indian equity market, which saw the benchmark Nifty 50 index slump 5% on Monday, is at the peak of uncertainty due to geopolitical turmoil and the negative risk sentiment after the imposition of tariffs, said Nair. However, the situation is bound to get better from hereon, he added. 

The improvement in Indian equities will be led by large-cap stocks as they still remain attractive from the risk-to-reward ratio perspective, Nair said. He further said the returns from India's equity market will outperform corporate earnings growth at least for the next five years.  

Nair said the mutual fund aims to have assets under management of INR 1 trillion in the next five years. "We have actually outbeaten the industry growth by 50%, which means we are gaining market share. So we were around INR 130 billion or INR 140 billion, now we are over INR 200 billion. And over the next five years, we want to reach that INR 1 trillion mark," he said. 

The fund house is getting INR 1 billion of systematic investment plan flows as of now, and Nair expects these to grow to INR 4 billion in the coming three years. The company also plans to launch a specialised investment fund in the next six months, Nair said. 

Union Mutual Fund is also considering and evaluating alternate investment funds as a business wherein it will look at the private credit space on the funds, Nair said. "We are also very gung-ho on flows into India from international markets," he said. Furthermore, Union Mutual Fund is looking to attract foreign capital and plans to set up an office at GIFT City within the next six to nine months, Nair said.

Talking about the Reserve Bank of India's monetary policy, Nair said that the central bank is likely to cut repo rate by 75 basis points in the current financial year and he expects it at 5.50% at the end of 2025-26 (Apr-Mar). "RBI is pro growth, cutting rate alone will not help, but it is also adding durable liquidity into the system," he added.

On expectation of a fall in the net interest margins of banks post the likely rate cut, Nair said, "Over the next 3-5 years if there is lot of economic activity happening, some of the specific banks could look very attractive. So not very worried about NIM (net interest margin) change. It should get compensated by volume growth. Looking at the valuations, there are interesting opportunities in the banking sector both on the public as well as on the private sector."   

Nair said he is optimistic about India's strong growth prospects. Union Mutual Fund is focusing on sectors like telecom, capital goods, and industrials, which are seeing increasing demand. Pharma is another area of focus, in which India has a global edge and with it being exempt from tariffs, margins remain healthy and there's potential for gains, Nair said. 

In terms of sector positioning, the fund is overweight on consumer discretionary, capital goods, telecom and healthcare stocks. It is underweight on energy companies due to their dependency on commodity prices, and slightly negative on metals amid demand slowdown concerns. "It depends upon commodity prices and if you are heading for a slowdown you could see some bit of corrections. So all these cycles play out and when there is a slowdown you will have this thing. But this is today. Probably after six months when we speak, something else would be our preference," Nair said.  End

Reported by Kabir Sharma and Sachi Pandey

Edited by Tanima Banerjee

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