Sunil Subramaniam, MD and CEO of Sundaram Mutual Fund (MF), spoke to CNBC-TV18 about the fundamentals of the market.

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“There are two separate trends which are driving this market. There is a profit booking from people who have entered the market two years ago and who are booking profits because of the election uncertainty and saying let me capture my gains and relook at it and there is fresh money which is flowing in and there from last month to this month, what we are seeing is a lot of HNI money is now flowing into smallcap and midcap segment,” Subramaniam said on Friday.

Talking about the MF flows, Subramaniam said, “I would say gross flows last month were about 10 percent down. So we think that this month the gross flows should be back up 5 percent. Net flows – I am not able to predict the redemption pattern because at our counters we are not seeing any significant change in the redemption pattern.”

“The way the investors are perceiving midcaps and a fund manager perceiving midcaps are two totally different things. At no point will I buy a mid-cap for value. I will buy only the growth of the midcap. So that is why stock picking is very important. The philosophy that we follow is growth at a reasonable price (GARP). I am still searching for growth despite the value correction,” said Subramaniam.