The prices of Indian companies have reached ridiculously cheap levels, according to Avinash Vazirani, manager of the new Jupiter India fund. He says bargains are rife following a 40% correction in the market in the first few days of last week.
The Jupiter India fund, which is structured as an onshore Ucits III fund, is launched this week. It will invest in 50-60 companies and Vazirani says that in the present conditions he would like to buy every firm associated with India’s domestic economy.
Vazirani, who joined Jupiter last July, has managed Indian equities for several years. In 2005 he founded Peninsular Capital Partners, where he ran two Indian equity funds, and before that he was chief investment officer of South Asia and Africa at BNP Paribas Asset Management for eight years.
He describes his investment style as traditional growth at a reasonable price (Garp), using bottom-up stockpicking with a top-down overlay. He says the new portfolio will have a bias to large and mid cap companies and have no exposure to small and micro caps owing to too much due diligence.
India’s stockmarket is the eighth largest in the world, and Vazirani argues that while China’s growth is close to peaking, India’s continues to grow. A reason for this, he says, is the internal growth taking place, with a growing domestic market and the rise of the middle class.
He says: “India’s economy is different to other emerging market economies. Services account for more than 50% of GDP, whereas exports as a percentage of GDP is tiny at 18%. It is a consumption-based economy, which makes it much more resilient to outside shocks.”
He puts the sudden falls in India’s stockmarket last week down to panic selling by foreign investors, but adds that the falls will have a minimal effect on India’s predicted growth this year. Goldman Sachs has lowered its previous expectation of 8% growth in 2008 by 0.2%, while Citigroup, which expected 9.4%, now expects 9.1%.
“Last month alone 8.1m mobile handsets were sold in India and the country is now Nokia’s biggest single-country market,” says Vazirani.
The fund has a fixed offer period from February 1 to March 3, carrying an 5.25% initial fee and a £500 lump sum minimum investment.