The fund's holding in the technology sector is more than the financial services sector. How does the fund see this in the light of stock performance in both these sectors?
The technology sector is underperforming on a YTD basis relative to banks/financial sector and it is underowned.
Excluding, Subex Systems, which is not exactly a technology firm like Infosys and Satyam, our exposure to the tech sector is 5.6 per cent. We are positive on the sector but are concerned from the macro angle - rupee appreciation.
Hence, a lower weight. We are positive on the financial services sector, too, but not much at this point of time since many banks are valued close to their fair valuations.
Almost 25 per cent of your debt holding is in one company. Doesn't this represent an element of risk?
The debt portion in the fund is to balance the upsides and downsides of the equity markets and not intended to take too much interest-rate risk.
At this point of time, we are uncomfortable about taking interest-rate risk in the fund. Hence, we bought into commercial paper, which is a money market instrument of very short maturity.
What is your prognosis for the stock markets?
The stock markets could deliver higher returns than bond markets at this point of time. As per a CII survey, industry expects capacity utilisation rates to improve.
Incoming power projects and continued housing sector and road sector growth could see cyclical and investment cycles taking place one behind the other.
We are already seeing import of capital goods going up and the IIP capital goods index growing at 9 per cent for the last 18 months. We believe that all this should augur well for the stock markets.
