Mkts may consolidate for next 1-2 months: Birla Sun Life

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

Q: As an investor what are you looking at from the market at this point in time, are you a buyer at dips or do you think the way global economy is trending you are going to get things much cheaper maybe in a month or two?
A: The way we are looking at the market post the budget event, some amount of hope still remains from the policy point of view whether it is opening of the FDI segment into the country and some of the other reforms which they are supposed to announce as per the economic survey which have indicated very clearly that these are some of the key drivers that would be there from the India point of view, while the hope remains. We also feel that the market has run up a lot since January and at this point of time, the results season is around the corner and we need to assess the impact of the monsoons, all put together, also the recent volatility that is emerging in the global market, our feeling is that the markets will largely consolidate for the next 1-2 months timeframe in a range where the markets will have to absorb some of the things which are hitting them. The key to watch out at this point in time, the kind of initiatives which the government will announce mainly keeping in mind the high fiscal deficit which is the area of concern and second is to what extent the monsoons could have an impact and the overall economic outlook going forward and keeping these two factors in mind that come from the government, it would be very crucial for the market to go to the next level. As an investor, I think on the basis of mutual funds, given the current environment we have to tweak some kind of portfolio changes mainly keeping in mind the overall volatility in the portfolio and the kind of risk which you are running on the basis of earnings outlook which could come and the long term outlook I think which we at this point of time have a very high level of conviction in terms of owning the stocks in the portfolio. The kind of cash levels which would have run in the past and what we are running today, I think somewhere around 7-8% cash which you are running could be there in most of the equity funds which I think we feel that given the outlook which is emerging post in terms of the budget and in terms of what kind of policy announcements that could come, one would take it probably better off going long on the equity market and also given the level of interest rates at which I think it is prevailing today.

Q: A lot of asset management companies now have launched new fund offer (NFO's) over the past one month as that deadline for entry really comes across on August 1^st, are you looking at jumping on the band wagon and post the abolishment of this entry load how does life change in terms of the distribution side?

A: As far as the NFO goes, we don't have any at this point of time running, we have been selling the existing products which we feel that the ones they are doing very well and they all, right from bringing in the long term savings into the schemes point of view, post 31^st July when the new regime begins with a no load kind of a structure, one has to wait and watch as to how the industry is going to evolve, both from the Mutual Funds point of view as well as from the distribution point of view. The business model which has been built in a period of time, keeping in mind the new change in load structures maybe the regime would undergo a major change; we would wait and watch as to how this is going to evolve actually. Its too early to make a comment on that.