Manager speak: V Suresh, fund manager, Unit Scheme-95
With the divestment process hitting a roadblock, what is your outlook on the market?
A combination of factors such as the US attack on Iraq, the increase in crude oil prices, the below normal monsoons, and the delay in the divestment process did have an adverse impact on the markets. Since we were underweight in the petroleum and information technology sector, we were pretty much insulated from the recent slide in stock prices. With stock prices continuing to fall, we feel there are a lot of opportunities to buy into stocks with sound fundamentals at attractive levels.
Which sectors are expected to do well this year?
We are very bullish on domestic pharmaceutical companies. Generics exports and their capabilities in basic research will ensure that these companies continue to grow at a steady pace. Large cap stocks such as Infosys and Satyam in the technology sector are also likely to do well in the long term. In fact, we are using the recent decline in prices to increase our exposure to infotech stocks, especially stocks like Infosys Technologies.
Given the volatility in the stock market, most mutual funds have increased their cash exposure. What has been your investment strategy?
No, we haven't hiked our exposure to cash. We have a minimal exposure of one to two per cent to cash in order to meet redemptions. Since we feel the markets are attractively valued at current levels, we intend to stay fully invested. Our equity exposure is around 55 per cent of the fund corpus, and we intend to maintain it at current levels.
You seem to be very bullish on Grasim, which is currently the top holding of your fund. What are your reasons for being bullish on the stock?
We expect the cement sector to do well in the next six months. The increasing momentum in infrastructure projects and the boom in the housing sector is pushing cement prices higher. We expect cement stocks, especially Grasim and ACC to do well in the coming months.
