See buying opp in banks & infra sectors: JP Morgan AM

Krishnamurthy Vijayan, CEO of JP Morgan Asset Management says that it is a pleasant surprise that the Indian investor has been displaying a lot of maturity since December.He adds that mutual funds are sitting on 5 - 8% of cash on average.

Vijayan sees buying opportunities in banks and infrastructure sectors. He was speaking to CNBC-TV18.

 Excerpts from the exclusive interview with Krishnamurthy Vijayan:

Q: Give us more idea how much more downside are we looking at or can we possibly expect in this market. What are the factors that make it possible to assess it or blur that assessment?

A; Part of what has been happening this week is really because of the inflation number. People have been getting jittery about the economic growth story. I personally think that much of it is the reaction from what’s been going on globally which has affected sentiment. It is difficult to predict a downside and index downsides are something that as a philosophy our house doesn’t predict

Q: What is your own assessment of what mutual funds have been doing over the last 2-3 months? Have they been deploying money or have they seen any kind of redemption pressures?

A: It is a pleasant surprise for all of us that the Indian investor has been displaying a lot of maturity since December, January was a great month and so was February, March was more or less in line with the averages of late 2007.

I personally think the efforts made tell people not to time the market and just invest systematically, seems to be paying off and cash inflows have been reasonable.

Q: What is your own assessment across all your funds, what is the average cash level and for the mutual fund industry as whole? How much cash do you think they are currently sitting on an average?

A: I think most people would be sitting on between 5-8% of cash. We usually would be around 4-5% in cash because we as a house believe in low cash exposures. The last 3 months have given us opportunities to buy into stocks that we like. So as an industry it’s a good time for us to accumulate.

Q: What is the area that you think most warrants accumulation in terms of valuation, in terms of being able to ride out the next year or so, be it the global concerns, interest rate risks, earnings or the forex derivative exposure, which are the best areas to park funds?

A: In terms of sector, one has seen banking sector getting badly mauled in the recent past, that continues to give us opportunities and some of the infrastructure stocks are selectively giving us lot of opportunities to accumulate.   

We are doing it cautiously because evidently the market is not in a phase where we can really predict the downside.

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