MFs bullish on IT, telecom, steel

Fund managers expect the equity market to display volatility with a positive bias next week. On the back of good January-March results, fund managers are bullish on stocks of information technology, steel, and telecom companies.

In debt market, some fund managers said they prefer to maintain their cash levels, while others said they will look at investing in short-term as well as long-term bonds.

Reserve Bank of India today set a higher-than-expected cutoff yield of 8.16 per cent on the 10-year benchmark 8.07 per cent, 2017 bond.

R K Gupta, managing director and fund manager, Taurus Mutual Fund said, "I expect the market to remain volatile, but there will be a bias towards the positive side."

This week, there was very little change in key indices, compared with the previous week. Gupta is bullish on information technology, steel and capital goods stocks, citing "good quarterly results" as the reason for the same.

A fund manager said he will monitor banking and telecom sector stocks closely next week, particularly Kotak Mahindra Bank.

Since April 1, foreign funds have invested a net $1.37 billion in Indian equities, compared with net purchases of $316.7 million in March.

Fund managers' major concern here is whether the government will announce an auction under the Market Stabilisation Scheme for Rs 2000-3000 crore. RBI also raised the ceiling on mop-up under the Market Stabilisation Scheme to Rs 1.1 lakh crore for the current financial year.

K Ramnathan, fixed-income head, ING Vysya Mutual Fund, said, "There is no positive trigger in the market. MSS issuance remains a concern and the auctions in May are awaited. We choose to maintain our cash levels next week."

On market direction, Ramnathan said he sees no major change in the market next week. Ganti Murthy, fund manager, SBI Mutual Fund, also felt the same. Murthy said, "I see the short-term rate shooting higher next week."