Share Bazaar News India

Ved Prakash Chaturvedi, MD of Tata Mutual Fund feels that the three things that the market will now react to are inflation numbers, monsoons and the elections because the fundamental performance and growth numbers seem to have been digested very well.

Excerpts from CNBC-TV18’s exclusive interview with Ved Prakash Chaturvedi:

Q: Do valuations and fundamentals after this earning season suggest or justify more upside from here or would you draw the line around these levels?

A: The result season clearly has shown up no surprises. I think it has been in-line with what one has expected. There is some sense of a slowdown; there is some sense that earnings numbers as expected have reflected the slowdown in the economy with interest rates having hardened. Since then, there would be some more slowdown. In that context, it is difficult to believe that we are in for a significant rally from here. I think we are also not out of the woods as far as the negative newsflow from overseas is concerned. We clearly realized that this rally is a relief rally and our sense is that while it will not be as volatile as maybe it was in March, we are not out of the woods. There would be some volatility maybe the index would be around 7-10% from where we are right now but I guess the fact that this is a relief rally is definitely clear to most fund managers.

Q: Some of the domestic concerns are out of the way with the policy meet?

A: Yes. I think for the first time after a very long period they are talking dovish, they are talking about no downside risk, they are also talking about maybe a pause at this point of time to the rate cut scenario clearly showing that the feeling is that enough has been done and now they want to sit back and wait for policy actions to take results.

Our sense is that it is very positive for the market and I guess those cues are being taken by the global markets and certainly I think policy related concerns both for the domestic and overseas markets seem to be now behind us. If I may just quickly say that I think the three things that market will now react to are inflation numbers, monsoons and the elections because the fundamental performance and growth numbers seem to have been digested very well.

Q: Amongst the earnings performances out, what did you make of two sectors - telecom and FMCG?

A: I am afraid my response is that it was in-line with what was expected, isn’t it? Telecom was a bit of a positive surprise but I guess it was expected that the telecom will do well. It would be the bright spot in this period. So I would say that there were not any significant surprises as far as we are concerned and our sense is that, that trend of no surprises will continue in the future.

Q: What are the odds that this is not just a relief rally and carries on longer than most people belief?

A: I would be very happy if that happens. But our sense is that look at the fact that interest rates have gone up, look at the fact that inflation is at its peak, look at the fact that newsflow from overseas is unlikely to be extremely positive over the next few months. We are going into a period where the election scenario will start becoming noisier in India and I guess all this will have its impact on the market and hence it is difficult to expect that we are going to be into a blowout market situation.

Q: Give us one quick word - there has been so much talk about the credit policy day and the bond market action - the policy leak etc; what is your sense talking to peers in the industry was there a leak and did people benefit from it?

A: I do not know how to respond to that. But my sense is that certainly there is always anticipation in the market about what is going to happen in the policy. People do take positions based on their expectations and I guess that is what happened. I suspect that I do not have any definite indication to say that there was a leak. I think it was normal - people always take positions, they have to do it, that is their job and that is what happened again.

Q: If the call is that the market will remain rangebound for the next few weeks, what have you been doing with your individual stock positions just trimming them a bit are you mostly holding on, have you increased cash what has the call been these past few weeks?

A: We have proactively looked at our portfolios - we have looked at the fact that some stocks were really hammered down below their intrinsic value in the sharp fall and we have reallocated our portfolios to stocks where we felt greater value has emerged based on the fact that markets had hammered them down and where there was earnings visibility for a longer period of time. So it has been certainly a very active period as far as the portfolios are concerned and I hope the portfolios are now positioned to benefit from the uptrend as it is happening right now.

Disclosures: My comments on individual stocks should be seen in the light of the fact that either the funds we manage or I may be buying or selling these securities.

Source: Moneycontrol.com