Manager Speak: Parijat Agarwal, fund manager, Sun F&C MIP
What's your take on interest rates? Do you see them stabilising at these levels or are they headed lower?
The interest rate outlook remains positive. Liquidity in the system continues to be ample. Forex reserves are at an all time high of US$68b.
Inflation continues to be low and has remained below 4 per cent. Global interest rates are expected to remain low as the global economy continues to recover. The pace of recent rally in bond market has led the RBI to intervene in order to restore stable market conditions.
What are your reasons for reducing your exposure to AA papers?
The credit spread between AAA and AA+ has narrowed substantially in the last two months. Therefore, we booked our profits in AA+/AA papers and moved to AAA papers thereby reducing the overall portfolio risk also.
Despite having a mandate to invest upto 15 per cent, your exposure to equities has been around 5 per cent of the total corpus in the past few months. Didn't you miss out on the gains from the recent rally and are you now looking to hike your exposure to equities?
We have increased our exposure to equity from 5.28 per cent in September to 8.93 per cent as of now and plan to increase it to 10 per cent.
What's your outlook on the equity markets?
The outlook is bullish. Restructuring of business, debt and cost reduction has resulted in improved profitability. The Sensex at 3300 continues to trade at the lower end of P/E band. The resolution of PSU disinvestment would further result in the sentiment turning positive.
Going ahead, though short term corrections are possible, the sound underlying fundamentals of the economy should see the positive uptrend continuing in near future. The market continues to trade at attractive valuations and is offering a good opportunity for long term investors.
