In conversation with Anand Vardarajan, Chief Business Officer, Tata Asset Management
The government is taking various steps to make EVs a popular option by giving tax deductions and in some states registration fee waivers etc. Growing income and rapid urbanisation are other demand drivers for this sector, asserts Anand Vardarajan, Chief Business Officer, Tata Asset Management.
Could you provide more information about the Tata Nifty India Tourism Index Fund?
We are very excited about our Tata Nifty India Tourism Index fund. For any sector to do well, one needs to observe if it is tail-winded or head-winded. We have seen that government push has been massive in this sector. The launch of the UDAY scheme to connect smaller towns and cities by air resulted in airports doubling from 74 in 2014 to 148 in 2024. PRASAD scheme is another one to develop pilgrimage tourism and we are seeing the results of that. Hotel occupancy rates are at 70 per which is a multi-year high.
Airline companies, travel booking, and luggage business are doing relatively well. These bode very well for the entire sector. The fund attempts to capture the entire value chain which cuts across all the constituents mentioned here. This coupled with discretionary spending going towards travel make it a great combination for the growth of the sector and this is what our fund is aiming to capture. (Source: Press Information Bureau (PIB), Ministry of Railways, Ministry of Road Transport & Highways, Ministry of Civil Aviation Frost & Sullivan Research and Hotelivate; HVS Global Hospitality Services).
How does the Tata Nifty500 Multicap Infrastructure 50:30:20 Index Fund align with the various government initiatives for infrastructure development?
The infrastructure sector has seen a massive move in the last couple of years. Government has made large capital allocations in the sector and the growth is visible in terms of better connectivity be it road, rail or air. This is surely helping in reaching place swiftly, safely and saving both cost and time. The infrastructure index usually is Large-Cap focused.
We wanted to add mid and small companies which play a pivotal role in the sector but may not be large enough to be in large caps. We felt it was sure a play and hence chose to launch a fund which has 50 per cent weight to large cap, 30 per cent weight to midcap and 20 per cent to small cap. This gives a much wider basket to participate in and diversifies the portfolio across the market cap.
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Considering the budget just concluded, which sectors do you believe will be in the spotlight?
We continue to remain constructive on industrial and capital goods. We like pharma and banking which offer some value at this point in time. We are neutral on IT and we believe there could be a very interesting opportunity here soon. We are quite sanguine on consumption and we believe these companies especially staples could do well.
How will the newly launched Tata Nifty Financial Services Index Fund benefit retail investors?
Financial services account for nearly 40 per cent of the large-cap weight. This cuts across different types of companies within the banking, NBFC and insurance space. We believe that GDP growth has to be fueled by the financial sector and these companies are well poised to do that.
It is observed that financial services usually grow at a faster pace than the index and hence it becomes an interesting play on the economy. If you believe that the Indian economy will do well in the next few years then you may consider this fund in their portfolio.
How is the Tata Nifty Auto Index Fund positioned to benefit investors as the EV sector gains deeper penetration in the auto industry?
The auto industry is at an inflection point. There is a burgeoning demand of the aspirational middle class which wants to upgrade their lifestyle and automobile becomes a critical part of it. There is a second driver of a massive technology change with electric vehicles which is causing a shift in the demand pattern. These two things together can potentially make it very interesting for the sector in the times to come. The government is taking various steps to make EVs a popular option by giving tax deductions and in some states registration fee waivers etc. Growing income and rapid urbanisation are other demand drivers for this sector. These make it a compelling category to consider in one’s portfolio.