S K Mitra, director, Birla Global Finance, is of the view that the positive foreign institutional investors (FII) inflows will continue in the coming months. He in bullish on the infotech (IT) and pharma sectors but urges investors to be prudent in their stock selection as valuation theories of IT firms are constantly being re-written. He spoke to Rutvij Parikh and Salil J Panchal.
What is your outlook for the Indian markets? Where do you see the Sensex in coming months?
It would not be prudent to judge where the Sensex would be in the near future. But one thing is clear that over the past three years there is growing optimism for the Indian economy. What is required now is to improve basic infrastructure in terms of roads, transport, ports, shipping and power lines. FII investment policies in recent years is a good sign. Most of them have a long-term perspective. I am confident that with the correct signals such as opening of the insurance sector and the derivatives trading, the FII sentiment would remain positive. There is more required in terms of a clear telecom policy.
Which are the sectors which are promising?
The IT boom will continue. But the advise to investors is to be selective. Crucial issues such as quality of management, client base, type of business, growth prospects and the reach of the product base are important need to be looked into. Valuations theories for IT firms are being re-written. In overseas markets valuation is seen as a multiple of revenue/sales.
What are the future plans for the Birla Mutual fund?
We will convert two of the Apple fund schemes into an MNC fund and an IT fund. The infotech fund would be slightly larger of the two. While we have not been into sector funds over the years, the scope is now to widen this range and see the appetite for such funds. The Birla Balanced fund, which was launched recently, has seen assets under management rise to Rs 416.03 crore. Balanced funds are the flavour of the season and several other mutual funds are launching similar schemes.
Your firm manages a range of funds now. However, the Birla Gilt Plus plan's has seen erosion in funds from Rs 7.35 crore on November 29
