[04:32:58 PM]
=> Myiris : Welcome to the live chat
session with Mr. K. Seshadri, Investment Analyst, Deputy Editor,
Business India
[04:34:04 PM] => Myiris
: We regret that the scheduled chat with Mr. Sandip Sabharwal,
SBI Mutual Fund could not be held because of unavoidable circumstances
[04:34:39 PM] => Myiris
: Welcome to the chat session, Mr. Seshadri
[04:35:03 PM] => DISCLAIMER
[04:35:17 PM] => Mr.
K Seshadri is the Deputy Editor, Business India. At the time
of this conversation / chat, Mr. Seshadri may or may not have
positions in the stocks mentioned below, although holdings
may change at any time.
[04:35:36 PM] => The
views expressed by Mr. K Seshadri is based upon information
that he considers reliable, but does not represent that it
is accurate or complete, and it should not be relied upon
as such. Mr. Seshadri, his company and its affiliates, officers,
directors, partners, and employees may, from time to time,
have long or short positions in, buy or sell and deal as principal
in the securities, or derivatives thereof, of companies mentioned
herein and may take positions inconsistent with the views
expressed. None of the information contained herein constitutes,
or is intended to constitute a recommendation of any particular
security or trading strategy or a determination that any security
or trading strategy is suitable for any specific person. To
the extent any of the information contained herein may be
deemed to be investment advice, such information is impersonal
and not tailored to the investment needs of any specific person.
You should consult with and rely upon your own advisors whether
and how to use such information in making any investment decision.
[04:35:58 PM] => Lastly
the views expressed by Mr. Seshadri have no bearing whatsoever
with that of IRIS Ltd. IRIS does not guarantee the accuracy,
adequacy or completeness of any information and is not responsible
for any errors or omissions or for the results obtained from
the use of such information. IRIS especially states that it
has no financial liability whatsoever to any user on account
of the use of information provided on its website www.myiris.com.
[04:37:26 PM] => Suresh : FIIs
have net buyers in equities and net sellers in debt. MFs have
been net buyers in debt and net sellers in equity. Why this
divergence?
[04:38:00 PM] => KS
: FIIs do not have the redemption pressure, except ofcourse
the December net asset value problem. I believe they have
been shuffling their portfolio � booking profits and re-entering
� at various points of time effectively. There is also the
fact that their total investments are high, which gives them
much room for active management of investment. MF�s do not
have this advantage with pressure of redemption dogging them
all the time, with new inflows being limited.
[04:38:46 PM] => The
outlook for interest rates is not positive and that should
explain why FIIs may find it sensible to liquidify debt investments.
[04:40:42 PM] => The
preference between debt and equities would depend upon two
factors. If you are free to take a long term view you will
opt for equities. On the other hand, you will go for debt
(despite the not so promising outlook for interest rates),
because you cannot take into your stride the downside risks
that is still present in the economy and markets.
[04:42:06 PM] => Anand : What
will be the impact of the US-64 crisis on the rest of the
mutual fund industry? Do you expect investors to move into
safer avenues like bank deposits?
[04:42:49 PM] => KS
: Events at UTI, the way they have so far been highlighted
could have led many to wonder about how efficient was fund
management out there. If the restructuring exercise at the
fund management level at UTI is convincing, it will help restore
the confidence of the investors in mutual funds. Investors
are already shifting into bank deposits, which shows that
investors do not feel comfortable about trusting their savings
to mutual funds. This phase will have to work itself out.
[04:44:40 PM] => Sam : Isn`t this
a good time to launch equity funds? With the markets down,
equity is cheap and you could show good returns. Why does
the mutual funds industry not launch funds by thinking contrarian?
[04:45:54 PM] => KS
: Yes, I think it is good time for to launch equity funds
by those funds who have accounted themselves reasonably well
in the last two years. The point is that such mutual funds
would need to walk their potential investors through the process
of awareness that the return on equities on the longer horizon
can be better than bank deposits. I feel the education process,
which can come only out of convincing research effort, is
not adequate at the moment.
[04:46:52 PM] => Manoj : What
are your preferred investment sectors in this current market
scenario?
[04:47:15 PM] => KS
: The software sector would still rank on top, as the outlook
for the sector is competitively better than other sectors.
The software sector globally is expected to grow atleast at
10 per cent in 2002 and Indian companies can hope to log in
30 per cent upwards. So it is a trade off between bottom picking
and potential two years down the lane. The game is getting
to be one of medium to long term.
[04:49:17 PM] => The
power sector is the second preferred one. Sure there are problems
at policy and operational levels but the potential is immense.
And when you see telecommunication merging with power lines,
there is value addition.
[04:49:40 PM] => The
cement sector should qualify next, as the demand will exceed
supply in 2-3 years down the lane. The pharma companies hold
potential, but each company needs to be researched closely
to discover hidden potentials as also to avoid laggards.
[04:49:59 PM] => The
core sector like Bhel and ABB has an even outlook and should
merit investment at the right prices.
[04:50:14 PM] => The
FMCG sector is losing its charm given the complex matrix of
products, consumers, branding, and spending propensity of
the target population. Like pharma, here is a case of selecting
particular company than the industry.
[04:50:44 PM] => In
terms of investment strategy it is becoming increasingly important
to research and choose your companies carefully in the pharma,
fmcg and media sectors.
[04:51:04 PM] => Sanjay : Have
you discounted the worst about the economy or is there still
more discounting to be done?
[04:51:59 PM] => Rains
have been reasonably good. If this results in farm incomes,
a purchase drive in the economy will surface towards October-November.
That is positive. However, the upward revision of excise tariff
in the last budget has added a burden to select segments of
the industry. These costs will take time to be absorbed by
the consumer. Investments into the economy have flattened
both private and public. Until a solution is found for these,
it is difficult to say that the worst in the economy is over.
The second rung of reforms is badly needed.
[04:55:02 PM] => Ashok : When
do you expect a reversal in the US slowdown? Do you expect
second-rung software stocks to survive till then?
[04:55:24 PM] => KS
: Reversal in US slowdown is expected towards the first calendar
quarter of 2002. Those second rung software companies who
are enterprising enough to seek out the potential for outsourcing
in US will survive.
[04:55:50 PM] => Raghu : What
are your views on the future direction of Indian interest
rates?
[04:57:06 PM] => KS
: The threat of inflation is not there due to two factors.
First with globalization products are available at competitive
prices. Second investment avenues are very limited. Interest
rates could soften further!
[05:02:08 PM] => Terry : Are high
returns from debt funds sustainable?
[05:02:36 PM] => KS
: If economic growth is planned and triggered on a longer
horizon, debt funds could still provide reasonable returns
because of investment avenues. That does not seem to be happening
now.
[05:02:57 PM] => Hari : What is
your advice to investors - equity or debt?
[05:03:18 PM] => KS
: Equity will still have considerable risk until middle of
next year, when a new assessment can be made. Therefore investors
should go for a mix of equity and debt. Debt could form 60
per cent of investment. The ratio could be revised after taking
stock of the economy in February 2002.
[05:03:54 PM] => Mani : What are
your expectations regarding the growth rate of the Indian
economy?
[05:04:13 PM] => KS
: There is a lack of inputs to drive the growth. Unless this
comes through fiscal expansion the growth rate cannot go up.
[05:04:37 PM] => Rakesh Nagrani
: What are the prospects of Mahindra and Mahindra?
[05:10:06 PM] => KS
: Wait until end of August to get a grip on how the rain and
its distribution have been to decide the outlook for tractors.
Gujarat and Rajasthan, which suffered from draught last year
have had good rains this year. M&M may post just zero growth
in tractors or just 5 per cent up in tractors. However the
fortunes of the company will be decided by the Utility vehicle
segment, from which it earns close to 45 per cent. If it manages
to get favourable ruling on software tops, which have been
banned in five states, and push up sales post launch of Scorpio
in the second half, then on Y-O-Y basis things will start
looking up. The prospects for the scrip as a long term investment
is good, but the bottoming process could continue uptil end
of 2001.
[05:14:19 PM] => Jayesh Shah:
When is the time good for investing and redeeming equity funds?
[05:15:03 PM] => KS
: It is better to wait for the January-March period for redeeming.
The economy signals will be clearer and better by that time.
Also the markets would have absorbed the new mode of trading.
For investing, the time is between now and December. The index
possibly cannot go down very deep down. So whenever sensex
hits the bottom close to 2800 is the time. The point is there
is going to be a waiting time after you invest. So you can
delay investment as much as you can without losing the bargaining
power.
[05:16:29 PM] => Deependra: When
do you see the reversal in the US slowdown happening?
[05:16:51 PM] => KS
: Already answered.
[05:17:29 PM] => Bharat: Is investing
in equity about timing or about long-term investing?
[05:18:04 PM] => KS
: It is about timing. Long term investing is to take care
that you can never call a bottom really!
[05:18:37 PM] => Meena: Do you
expect we will see any result on the disinvestment front?
[05:19:04 PM] => KS
: Say around Rs.5000-Rs.7000 crore
[05:19:21 PM] => Swaminathan:
Is it worth investing in blue chip funds now?
[05:19:53 PM] => KS
: It is worth, but remember this. The returns can only be
moderate. A 15 per cent return per annum should be considered
good. But add on possibilities exist into 2002.
[05:21:18 PM] => Swati: Do investments
in index funds make sense in the current scenario?
[05:22:01 PM] => KS
: They indeed do. That is why many MF�s are planning to launch
them.
[05:22:29 PM] => Bhaskar: In which
vertical industries do you expect to see growth or turnaround
during the next three to six months?
[05:23:01 PM] => KS
: The power industry will continue to grow, though it has
to keep crossing hurdles. In six months time you will see
that the software industry has bottommed out. The auto industry
will pick up, but impulse while positive will be only moderate.
[05:23:46 PM] => Murli: Do you
think that the deregulation in the petroleum sector will unlock
value for the government companies?
[05:24:19 PM] => KS
: Yes, this is logical to expect. But beyond the one-event
quality, the value of the companies will thereafter fluctuate
with petro prices and supply the world over. This one time
unlocking and its potential is what keeps the stock price
of shares like BPCL on the bounce. The same thing you find
in other petroleum companies of smaller dimensions. There
is much scope for researching and finding value-based investments
in this arena.
[05:25:05 PM] => Murtaza: US 64
crisis robbed hard-earned money of investors? You work for
the press (magazine). Can you tell me where UTI went wrong
with regard to us 64?
[05:25:54 PM] => KS
: Fund Managers should be afraid of being accountable. When
you cover a lot of investment under one umbrella and a unified
command at the very top, that is not at all good for fund
management. I think the management structure was faulty. The
shock is why did not UTI�s top management or even the Finance
Ministry let it continue like that. It is only Sebi which
was asking UTI to come clean and on par with other mutual
funds. Ultimately accountability is the criterion.
[05:26:28 PM] => Renu: Debt funds
seem to have raked in maximum inflows in the April-June 2001quarter.
Will the bull run in debt funds be sustained?
[05:27:28 PM] => KS
: I think they will be sustained. The fear of eroding your
investment in equities is very much alive and real even today-
even at the Sensex bottom, because the economy is willy-wallowing.
Investors have gone through fire and will continue to flock
debt funds, until they see clearer skies in equities- which
I believe will be April, 2002.
[05:29:40 PM] => KS
: Thank you very much for participating in this chat session
[05:30:30 PM] => Myiris : Thank
you Mr. Seshadri for making this an interesting chat session
[05:31:06 PM] => Myiris : We thank
you all for your participation
[05:32:34 PM] => Myiris : Coming
up next on myiris.com on Friday, 17th August, 2001, Mr. Devesh
Kumar, Head Research - ISEC Ltd
[05:32:51 PM] => Don't forget
to be there!!
[05:33:36 PM] => Myiris : That's
it for today....till next time....take care and happy investing!
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