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Fund managers remain bearish till the first quarter of 2012

Smart portfolios

Shilpa Johnson  |  Mumbai 

remain till the first quarter of 2012
Smart portfolios
Shilpa Johnson / Mumbai January 6, 2012, 0:25 IST

The slumped 24 per cent in 2011, owing to an increasing negative news flow from the international markets, coupled with bleak in the domestic market. The european debt crisis, global political unrest, US ratings downgrade, soaring headline inflation, depreciating rupee, political logjam over foreign direct investment (FDI) in retail and were some factors that weighed on the indices.

The of Smart Portfolios’ Season 4 share their views on the current year and the one gone by.

For the week, Rikesh Parikh’s net worth stands at Rs 9,51,000, down 4.9 per cent; Ashish Mittal’s net worth is Rs 9,07,000, down 9.3 per cent; Alex Mathews’ net worth is Rs 9,76,000, down 2.4 per cent; and Ajay Parmar’s net worth totals Rs 9,69,000, down three per cent.

“In 2011, the had been volatile, with a downward bias. From a high of 20,500, they corrected over 25 per cent to 15,500. With the prevailing attractive valuations, we expect some downward bias in first quarter of CY12. Expectations of rate cuts by RBI January onwards and the government getting into the implementation mode once the states elections get over would help the recover. Sectorally, I expect telecom, and information technology to outperform and see financials delivering higher returns after the rate cuts. From the current level, if the further correct 5-10 per cent, I would look at being fully invested.”

RIKESH PARIKH, VP (equity strategies), Motilal Oswal Securities
Top Holdings Cost
price (Rs)
price (Rs)
(Rs lakh)
Coal India 339.94 320.55 0.32
Dena Bank 76.10 52.95 0.32
Mcleod Russel India 234.20 196.95 0.30
State Bank of India 1783.97 1692.45 0.25
Deepak Fertilizers  166.16 126.15 0.25
Total investments     2.74
Cash      6.77
Net worth     9.51

“We believe the prevailing weakness can continue into the first two months of 2012, as investors wait for a major trigger in the short term. However, the possible interest rate cycle reversal can provide support to the market and also boost capital goods and rate-sensitive sectors like financial services and automobile industry. However, we remain optimistic beyond March 2012, as we believe the government will be forced to implement favorable economic reforms due to the emerging dollar-deficient scenario.

Though we continue to focus on dividend yield and cash-rich names, we have aligned our portfolio for possible macro triggers such as a reversal in the interest rate cycle. The strategy could change to an aggressive one if our expectations of positive economic measures being implemented come true by the fag end of this quarter.”

ASHISH MITTAL, fund manager (PMS), Centrum Wealth
Top Holdings Cost
price (Rs)
price (Rs)
(Rs lakh)
MRF 6816.10 6956.85 0.70
Balmer Lawrie & Company 618.48 465.65 0.61
Karur Vysya Bank 372.59 352.50 0.60
Bharat Electronics 1582.70 1411.15 0.56
Cairn India 315.18 339.35 0.56
Total investments     8.03
Cash      1.04
Net worth     9.07

“In 2011, we had been on the markets, our investments were limited and, so, the loss could be limited to 2.3 per cent. We remain on the markets, at least till the first quarter of 2012. Tracking a fall in food inflation, we expect the interest rates to decline. The lower borrowing cost will help more companies borrow; auto sales may pick up in the second quarter and the banking space may start posting earnings after a year of muted performance and rising non performing assets.

As of now, we are sticking to our existing investment strategy but, going forward, we may make some changes. We have added Muthoot Finance and Manappuram Finance to our portfolio, keeping in mind the strength in gold. We expect this sector to fetch good returns. By the end of FY12, we shall think of expanding our portfolio in the banking, IT, auto and infrastructural segments.”

ALEX MATHEWS, head (technical & derivatives research), Geojit BNP Paribas Financial Services
Top Holdings Cost
price (Rs)
price (Rs)
(Rs lakh)
Muthoot Finance 156.39 155.00 0.78
Aptech 74.84 70.05 0.70
Timken India 173.83 169.15 0.34
Manappuram Finance 46.97 49.35 0.25
Apollo Hospitals Enterprise 594.68 571.40 0.17
Total investments     2.30
Cash      7.46
Net worth     9.76

Ajay Parmar
“The previous year was a test of nerves for investors. In the domestic market, RBI’s efforts to curb inflation led the interest rates to reach a level where the growth started tapering. Corporate earnings were also impacted, leading to a fall in the stock market.

I have been a little cautious while investing this season. Most of my bets are trading bets with a short term perspective, as I see a fresh round of selling on the back of gloomy economic outlook and a cut in corporate earnings. The year will be another tough one and I hope the second half would be better than the first. My strategy would be to take some trading bets based on fundamental factors such as better earnings visibility and quality management. Given the kind of volatility, I am looking at a minimum of 18-20 per cent absolute returns in 2012.”

First Published: Fri, January 06 2012. 00:25 IST