• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Nilanjan Dey

With market P/Es close to historic lows (9-10 times forward), and higher FII inflows being witnessed in the last few months there is likely to be a liquidity-driven rally in the medium term.

KOLKAT, June 15

TATA Mutual Fund, whose total assets under management stand at Rs 1,650 crore, of which only Rs 235 crore represent equity, is mounting a fresh attempt to attract equity investors. Mr Shyam Bhat, Fund Manager, shares with Business Line his views on the stock markets.

Excerpts from the interview.

Are there enough positive elements in the market today?

With market P/Es close to historic lows (9-10 times forward), and higher FII inflows being witnessed in the last few months, not to mention an exceptionally high inflow in the first week of June, there is likely to be a liquidity-driven rally in the medium term.

The rupee appreciation is an incentive for FIIs not to defer their purchases, all other factors remaining favourable... Unlike in the rupee depreciation era of the past, where the FIIs were at a disadvantage in dollar terms, even if the prices of stocks that they invested in had remained static.

Industry production figures recorded last year were resilient despite a poor monsoon. Infrastructure spending and retail credit advancement mitigated the impact of a poor agricultural pick-up. These drivers are likely to continue in the current year. There are indications that we would have a monsoon much better than the past three years.

Needless to say, any disappointment on this front could lead to a correction in the equity market.

But do you see a general upside?

Yes, we do expect this in the broad market over the medium term on account of strong underlying fundamentals. There is a relatively high GDP growth in the economy, considered significant as many other economies are suffering from a marked slowdown.

Besides, there is robust infrastructure spending, low interest rates leading to a sharp spurt in retail credit and improved profitability for corporates. In fact, the current low interest rate environment makes it much less costly for corporates to borrow and pay off their existing debt.

You also have a situation marked by a downward trend in international crude oil prices, an improving geo-political environment and record foreign exchange reserves.

Given the current trends in equities, which are the sectors you are watching closely? What are your top holdings?

Tata MF is positive on automobiles and auto ancillaries, power generation and transmission equipment manufacturers, pharmaceuticals, banking, engineering, and oil & gas ancillaries. Several of these sectors and the constituent stocks were identified by our investment team quite early, and have appreciated over the past few months.

We would not be able to comment on stocks that have been picked up from these sectors in recent times. But if we were to quote our top holdings in different funds as on May 30, these would include Tata Engg (in auto and auto ancillaries), Tata Power (power generation and transmission equipment), Ranbaxy (pharma), SBI (banking), L&T (engineering) and Gail India (oil & gas).

It seems Tata Equity Opportunities Fund is suddenly being positioned differently. Why?

This was earlier a close-ended fund, one of the schemes that were acquired from IndBank Mutual Fund some time ago and later rechristened. It is being set as a fund with a predominantly bottom-up approach. The plan is to constantly identify opportunities in various individual stocks and sectors, with an aim to book profits when the target appreciation has been achieved.

Its management will be very pro-active, backed by fundamental analysis.

Article E-Mail :: Comment :: Syndication

Stories in this Section
MFs flooded with corporate funds

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line