Equities a Good Hedge Against Inflation

Nishid Shah is Co-fund Manager of Birla MIP (equity portion)

Fund Manager since October 2000

Investment style
Focus on corporate fundamentals and invest in growth stocks at value prices on the equity side

Best call(s)
Infosys, Tisco and Bharat Electronics

Worst call(s)
IBPCL

Current outlook
Equity markets have bounced back almost 24 per cent since the lows of May 2004. Despite the gains, the valuations remain reasonable and the long-term outlook continues to remain positive, largely due to the emerging opportunities for India, robust growth in exports, strong domestic market and corporate fundamentals.

The outsourcing opportunity (in software, BPO, auto components, pharmaceuticals and capital goods), revival in business capex cycle and robust corporate earnings will drive the market in future. In the short-run, the rising crude oil, inflation and interest rates might concern the markets.

Equity remains a good investment proposition for an investor due to its tax attractiveness and it is also a good hedge against inflation. We continue to remain positive and our strategy focuses on corporate fundamentals to identify growth stocks at value prices.