UTI Mutual Fund upbeat on construction, cement and auto

Markets have been rallying owing to strong liquidity across global markets, says Swati Kulkarni, Executive Vice President and Fund Manager-Equities, UTI Mutual Fund. She feels markets have reached a peak at current levels and expects them to consolidate.The monsoons, Seventh Pay Commission and government spending in road have been major triggers for the markets. She is bullish on domestic cyclicals namely construction, cement and auto sectors.The growth in usage of data by mobile users has been muted for the last two quarters. Data growth is a long-term driver for telecom companies, she says, and will affect their revenues and profitability.  Investors are mostly concerned about the stress on balance sheets of telcos from the investments they will make to enhance data services.Below is the verbatim transcript of Swati Kulkarni’s interview to Prashant Nair and Ekta Batra on CNBC-TV18. Prashant: What are you really doing now because one understands that the month of August in terms of inflows for equity mutual funds has further slowed down as compared to what we saw in July, the numbers are still about five or six days away by the time the association collates it, etc. Just give us a bit of flavour in terms of what the month of August just looked like in terms of inflows into mutual funds? A: I would say the inflows have continued and the scale can be debatable but definitely the inflows have been pretty good. Also, for the market if you see, the liquidity has been pretty strong across the global markets post Brexit or so. So, the markets have run up based on the liquidity and we see that probably the markets might consolidate at these levels. Ekta: If you had to pick up a sector in the broader markets to actually put your money in here on, which one would it be? A: If you look at the macro picture, we definitely see that monsoon and seventh pay commission and the government spending on roads and railways, that is going to be the trigger as far as the overall pick up in the economy is concerned. We clearly see private sector capex and the overall capex cycle to pickup only after about one and half year or so. So, in that case, I think it is better to be overweight on the domestic cyclical. So, we continue to have the some construct that we have been having for last six months or so where we think the valuations are supportive, the earnings are depressed because of the lack of traction on the topline and so that comes down to the sectors like cement, construction and also automobile as our top picks in the overall construct of the portfolio.For full interview, watch accompanying video...