Live: MF Stress Test: More Pain for Smallcaps or Rebound in Store? | Sandeep Tandon Exclusive

  1. - Results of mutual fund liquidity stress test causing anxiety in the market have been trickling in.
  2. - Sandeep Tandon, a market veteran & fund manager, discusses liquidity stress test results.
  3. - Tandon feels the stress test narrative is overblown and that fund managers are equipped to manage risk.
  4. - He believes the stress test is a step towards transparency and not a signal of crisis.
  5. - Tandon emphasizes that mutual fund liquidity is being closely monitored, and the stress test data points are not new information.
  6. - He also highlights the difference between debt and equity funds in terms of liquidity and risk management.
  7. - Tandon discusses the retail investor behavior and the concentration risk in small cap funds, emphasizing that the majority of the portfolio is retail investment.
  8. - He expresses confidence in the stability of fund flows into small and mid-cap funds, stressing the importance of market warnings by regulators as a part of their duty.
  1. 1. Regulators are warning investors to reassess their risk capacity in light of the sharp rise in small and mid-cap stocks.
  2. 2. They are asking investors to consider their investment horizon, liquidity, and risk profile of their portfolio.
  3. 3. Money managers also regularly assess the risk appetite of the country and individual sectors and stocks.
  4. 4. Retail investors should also consider their risk appetite and investment horizon before investing, as many often get excited and give up quickly.
  5. 5. Both regulators and money managers encourage investors to assess their risk profiling, but panic selling is not necessary.
  6. 6. The impact of regulatory talks on small and mid-cap funds and whether this will impact flows is a subject of speculation.
  7. 7. The market behavior and the focus on large-cap versus mid and small-cap stocks is a complex issue.
  8. 8. Small and mid-caps have shown a sharp rise, but large-caps are also important for a diversified portfolio.
  9. 9. There is a continued focus on mid and small-cap stocks due to the current market situation and investor behavior.
  10. 10. The shift to large-cap stocks from small and mid-cap stocks is not guaranteed, and the market dynamics are unpredictable.
  1. - The fund manager explains that they had a high exposure to small and mid-cap stocks in the past, but due to market conditions and opportunities, they have increased their exposure to large caps to around 28-30%.
  2. - He emphasizes the importance of stock selection and how even the large and mid-cap stocks have generated substantial alpha for them.
  3. - The manager mentions that they consider liquidity and risk profiles when making these investment decisions, and that they don't solely focus on recent market reports and stress tests.
  4. - He maintains his skepticism about the banking sector, believing that the leverage economy is declining and that the global economy is moving towards real economy, leading to a derating of the banking sector.
  5. - The fund has a bullish view on commodities, believing that they are in a super cycle and will continue to do well.
  6. - The manager highlights energy, metals, pharma, media, and infrastructure sectors as pockets of value. He particularly mentions public sector stocks as offering good value due to their strong liquidity. He also mentions a tactical exposure to the media sector, which is considered a neglected area with potential value.