Q: In the year-end portfolio, did you own a large chunk of or were you neutrally weighted on Reliance ?
A: No, we were underweighted Reliance. Reliance is 12-13% of the index. Hence, it's very hard to be, weighted that aggressively in Reliance. However, on Reliance, we were decently weighted.
Q: What's your call on autos? While the numbers are very good there is a debate on whether we have seen the best and from here on things cannot get better for the auto sector. Do you agree with that or you would remain overweight for a bit longer?
A: I believe you have to look at valuation on a case by case. I generally am of the belief that the auto sector in India, in terms of growth prospects, is going to continue to do well. Based on the amount of infrastructure spend going to happen in India, on the roads and other logistical means of transportation, commercial vehicles should see good growth. Rural incomes are still strong. I do see generally autos continue to grow. In fact, I met recently a global automotive expert, who said that the three countries that are going to really see strong growth for the next several years is India, China and US.
Based on some of the data that I have seen, I believe that the growth will be looking good. The question is whether the competition will still intensify and what that will mean for some of the countries because in small cars there is increasing risk of competition and whether valuations of some of these stocks will get stretched at some point. This is what you will have to watch. Growth does not seem to be a concern.
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