MUTUAL FUNDS

Over the next few quarters, the favorable impact of base will start to show improvement in GDP numbers<
29-Jan-15   17:10 Hrs IST

Mr. Sonam Udasi
In an interview with Capital Market, Sonam Udasi, Head Research, Tata Asset Management said, Within sectors, we think autos/auto ancillaries, cement, durables, IT and pharma are the segments that should continue to outperform.

Excerpts:

1. Where do you see the equity markets heading in New Year and why? What will the key driving factors for markets?

The Indian Equity markets have the advantages of several tailwinds, notably, focus on decision making in the government, easing crude prices and its beneficial impact on India's economy and thus, higher probability of decline in cost of funds for India Inc. This, and the beneficial factors like QE in Europe and Japan, has kept foreign flows focused on India. Additionally, over the next few quarters, the favorable impact of base will start to show improvement in GDP numbers. Keeping these factors in mind, we remain constructive on Indian equities. That said, volatility will be a hallmark for markets in CY15.

 

2. What are your Union Budget expectations in general and for Mutual Fund industry?

If there is forward movement on GST with firm timelines, it will be a positive. But much of the moves by policy makers now a days happen outside the budget. From the industry's perspective, we hope that the focus to encourage financial savings continues.

 

3. Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

We think quality companies across sectors will continue to attract disproportionate investment. Within sectors, we think autos/auto ancillaries, cement, durables, IT and pharma are the segments that should continue to outperform. Metals and commodities we are underinvested in owing to global volatility risks. We try and avoid companies that either operate in industries of extremely low value add, and/or have extreme leverage in the balance sheets.

 

4. With only three months remaining in FY15, how to expect government meeting its fiscal deficit target?

We think that there may a minor slip in the fiscal deficit target. But this in a way is known to the markets as signals have already started to emanate from policy makers on this.

 

5. When do you expect the RBI to cut rates next and why?

The rate cut cycle got kick started recently. Our own sense is that RBI may like to pause to evaluate the government budget aspirations and also to take a broader view on the global markets.

 

6. What would you like to advice to the investors in the current scenario? Looking at the rally in infrastructure funds, should one invest in them?

Investors should not rush and put lump sum investments. The best way to participate in Equities at this juncture would be the SIP route, as it not only takes care of short term volatilities, but more importantly, brings an investment discipline to look at Equities as a separate investment class where one needs to have sustained exposure and not only during market bull phases. India is underinvested in Infrastructure and thus, this space does present a positive investment case. But here too, SIP is the best way.

 

7. Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

As mentioned earlier as well, we think the investment in quality companies tends to give good results over time. We remain committed to that.

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