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See relief rally in mkts post election: Tata MF

Published on Tue, Mar 17, 2009 at 18:38 | Source : CNBC-TV18

Updated at Wed, Mar 18, 2009 at 12:46

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Ved Prakash Chaturvedi, Managing Director, Tata Mutual Fund

Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

Nifty

BSE | NSE 10/02/12

Are Mutual Funds betting on Nifty?

Q: We were just talking about some of these banking stocks how would you approach that space now, after the kind of correction we have seen in the first half of the month?

A: I would look at it in two ways. I think on one hand banking is a bright spot in India, when considered what is happening in the parts of the world - robust, strong banks and at the same time some of the rallies that took place in December and January was more on the back of an anticipation that interest rates would come down significantly and banks would benefit given the large treasury holdings. I think in the last fortnight or last one month that argument is changing, the feeling is that the kind of spends that have to take place to kick start the economy both of that have been budgeted and those that are yet to come chances are that interest rates will not come down as must as it is anticipated.

Also I think there is a fear of downgrades on corporate ratings and NPAs and both of these are playing on banks mind. So I would be cautious and I would wait for some more profits to be taken. But my sense is that it is a long-term robust segment of the Indian market and it certainly deserves a mention in the portfolios. As of now, we are underweight on the banking sector as a whole.

Q: Are you sensing interest coming back to the midcap space?

A: I think there is certainly some return risk appetite. It is the very beginning of some return of risk appetite and the interest that we have seen in some of the midcaps reflects the fact that some amount of confidence is returning to the market. We will feel that longer-term midcap will be a good story. Some of the midcap valuations have come down significantly. Some of these managements are very good and certainly there is a return of interest and return of very incipient risk appetite.

Q: Before the elections or around the election time we also have Q4 earnings. You saw the advance tax numbers yesterday what is the sense you have of Q4 earnings?

A: The sense is that Q4 earnings will come as per expectations, which are not very high. So, I do not know if Q4 earnings will vis-�-vis either disappoint or excite the market. I think around elections the market's attention entirely will be focused on what is likely to be the configuration of power at the centre and the market will be reacting to the news of the day. I suspect that the news flow on earnings is largely in the price.

Q: How likely is it that the rest of this series goes out on a very quiet note because there is so much more coming up earnings, elections all of it?

A: I do not know whether it will be quiet but it will be quite choppy because there is some new flow expected from overseas as well. Today there is the FOMC meeting, where I don't think much will happen in terms of any rate changes but lot of talk and stance indicators will come out. I think there is also expectation that there would be some package in the US, which buys all toxic debt etc. So globally there will be a lot of news flow opportunities in this period and markets will react to that. So, I think it will be choppy quite frankly.

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