To take investment call post poll outcome: UTI MF

Excerpts from Bazaar on CNBC-TV18 Watch the full show » Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

UK Sinha of UTI Mutual Fund said they are cautious about this market. He feels P/E multiples in the markets are quite high. Current rally is highly sentiment driven and he has not seen retail money returning to the market. He has seen some inflows in arbitrage funds and has not seen much money flow into pure equity funds.

He further said UTI MF has not increased cash levels and has been selective while deploying cash. It has not deployed cash very aggressively. "Investment focus will depend on the policies adopted by the next government. UTI MF will take investment call post poll outcome."

Commenting on the divestment, he said, "Looking at closing the divestment of 26% in UTI MF in the next 2-3 months. Eventual complete divestment in UTI MF will be a call the government and stakeholders have to take."

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

Q: Since you are one of the most influential asset managers give us your view on equity markets now after its recent spectacular rally?

A: We in the UTI are a little cautious. We see that the rally has been too fast and too swift. If you look at the number which was the lowest around March 9, we have gone up by almost 50%. You also do a little different analysis for example in the last ten year period from 1996 to now if you look at the four largest rally points, you discover that the per day gain has been in the range of 0.2% to 0.4%. Right now the current rally from March 9 is in the range of 0.7% per day gain. We are little cautious about these things and we would like to wait a little more before we can take a very positive view about the market.

Also if you look at the P/E multiples, you will find that the P/E multiples are now quite high especially if you look at the jump - from about 9.6% it has gone to more than 13.5%. If you look at the top ten stocks then they have gone up by about 17 times. So all these indicators point to a very swift move and we in UTI would like to be a little more cautious about the sentiments at this stage.

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