Downside risk to continue in mkts: Birla Sun Life MF

Q: Assuming that all the factors they you laid out do percolate into reality but with the fact that the political situation of India right now is in a bit of a limbo. Any perspective on that front with respect to- maybe if the Left withdraws support and even if the Congress is able to get other support of the Samajwadi Party (SP) but still might not be able to give more clarity into how the political situation might pan out and we are having various reports on how it could be a different scenario for the political situation in India. How would you factor that into your buying decision so to say in your fund?

A: While it is very difficult to make a comment on any kind of political event that could happen in the country. I think the way one has to look at today is the market has been coming off continuously taking into account some of this fundamental weakness which I was just mentioning, but also some bit of political uncertainty which could arise out of the nuclear pact which is pending.

Assuming a scenario that even if there is a withdrawal of the government but the Nuclear Pact is getting signed, probably the market is discounting some bit of adverse reaction on basis of this and I would assume that it is getting factored in the market; the way I think the market has been coming off.

At the same time, ultimately one has to look at and come back on - what is the expected price I am paying for the growth of what some of these companies would be offering - ultimately that’s what could come in and the market has been getting punished either due to the short selling which is come from the global investors or the fundamentals that are changing - it is also making people actually shift one to other asset class, as some sectors are getting punished severely compared to the normal course of the scenario. These are some of the things, which will eventually start playing a role.

Q: What is your call on interest rates sensitives and have you rearranged your exposure to this space?

A: We as a fund house have been relying on the portfolios mainly moving away from interest rate sensitive sectors like constructions and engineering and capital good sectors including some bit of banking where were little overweight about four-five months back and moved into some bit of sectors which do not- so much affected by the interest rates movement.

At the end of the day, the market as a whole is getting actually punished by the interest rate sensitives movement. Of course our portfolio has been to a large extent realigned to some sense to protect actually the fall in the sectors what you are currently seeing.   

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