TP Raman, Managing Director, Sundaram Mutual Fund AMC, said the fall in Reliance stock has led to the market fall because it has substantial weight in the index.

Raman is overweight on manufacturing and a bit on banking and finance.

According to him, tension has been eased and concerns about liquidity are gone. “If you look at the utilisation which papers report from time to time, there has not been a significant utilisation of these windows but however a climate has been created whereby mutual funds or fund houses do not have to have this appreciation that there is a liquidity issue. So, that has eased quite a lot of tension in the market.”

Here is a verbatim transcript of the exclusive interview with TP Raman on CNBC-TV18. Also watch the accompanying video.

Q: There has been a fresh bit of profit booking by DIIs (Domestic Institutional Investor) in today’s trading session, what are your views on the same?

A: I would think so because every market, the international and global markets do look good and there is good news going around; the US is up, Asia was up. So, I would guess it’s because of profit booking. I think perhaps there is news about Reliance stock that has taken a beating today. So, the market has fallen because it has substantial weight in the index. So that could be one of the reasons.

Q: How are you approaching the market right now in terms of deploying cash? What are the cash levels that you are sitting on at this juncture and how are you proposing to use the piled up cash on your books?

A: We have been deploying the cash, we were sitting on quite a bit of cash until the last week so we have started deploying good amount of cash since last week into the market and buying up on buying opportunities. So I would say, that the cash levels are considerably reduced today than what it was a week or ten days ago.

Q: Could you put it in terms of percentage?

A: We use to be around 27-28%. I think we have come down to about 18-20% levels right now. I am saying this is on a general average basis but it’s quite possible that in some of the funds we may have slightly higher cash; in some we may have slightly lower cash.

Q: Would you be a buyer at current levels or do you have some conviction that you may actually get some lower levels going forward and which are the sectors you would be overweight on currently?

A: The change that has been happening over the last week has been in all the interest sensitive sectors like banks and the manufacturing sectors. Those companies which are interest rate sensitive have been in the limelight. So, we have also been looking based upon our view of the valuation coming out of defensives which was a position that we took about a month ago and to selectively go into these stocks which are now coming back into favour. I think its manufacturing and bit of banking and finance right now. 

Q: We will switchover from the markets for a bit: We have had the Finance Minister speak to lot of the bankers over the past few days. He also did announce some bit liquidity measures for mutual funds and NBFC (Non-Banking Financial banking companies). Are you satisfied that the liquidity scenario has eased in the short-term?

A: I think the important thing or the good affect that this has had on the general market is that – the scene has been set, the tension has been eased and the concerns about liquidity that money being not available at the right time. I think those kind of concerns are gone. So if you look at the utilisation which papers report from time to time, there has not been a significant utilisation of these windows but however I think a climate has been created whereby mutual funds or fund houses do not have to have this appreciation that there is a liquidity issue. So, I think that has eased quite a lot of tension in the market.