It's 2005. And Sabharwal still fancies petrochemicals. But not as a profession, simply as an investment. After getting an engineering degree from IIT, Sabharwal did an MBA from IIM-Bangalore in 1994. Till date, he has not regretted the decision.

"During my summer stint at SBI Mutual Fund in 1994, I realised equity research was much more interesting," says the 33-year-old fund manager. In 1995, Sabharwal landed a job in the mutual fund industry as part of a campus recruitment.

Today, as the head of the equities at SBI Mutual Fund, Sabharwal manages around Rs 3,600 crore of assets. And the current market rally has fetched rich dividends to make him the Business Standard Equity Fund Manager of the Year.

For the year ended June 2005, SBI Global Fund ended up with a 111 per cent return. Not just that. SBI Global was adjudged the best fund based on risk-adjusted returns by Business Standard.

In statistical parlance, the fund had a Sharpe ratio of 0.28, which was the highest among all equity funds with a life of more than three years. At the end of June 2005, SBI Global had a corpus of Rs 265 crore.

In fact, 2004 was a watershed year for SBI Mutual Fund. That is not because the fund found a partner in French fund major Soc Gen. But because all of SBI Mutual's equity funds put up an outstanding show. Magnum Contra Fund, which tried to make money by betting against the market, gave a return of 98.87 per cent, while Magnum Multiplier Plus gave a return of 78.59 per cent.

Similarly, the newly launched Magnum Emerging Businesses Fund has also returned over 70 per cent since inception. Obviously, being at the helm of affairs, Sabharwal has managed to hit the bull's eye. How has he picked the winners? By being somewhat different from others. Sabharwal says a bottom-up approach to investing has helped. Tracking stocks regularly, through analysis of financial statements and meeting company managements, is of course part of the routine. His style, however, is not to scan complex spread-sheets, but to pursue good ideas regardless of whether they satisfy the conventional rules of financials and valuations.

To put it simply, Sabharwal truly believes that stock picking is more of an art than a science. "Understanding the management's vision about where it sees the company a few years down the line is important. In that sense, stock picking is more of an art," says Sabharwal.

No wonder, picking mid-sized stocks has been Sabharwal's strength.

Take, for instance, retailing major Pantaloon Retail. Sabharwal picked the stock in early 2000 when very few fund managers dared to buy it, given the poor state of its financials. The stock has appreciated from Rs 40, in early 2000, to Rs 1,500 levels at present.

Other stocks in which Sabharwal was an early bird include Praj Industries, Thermax, IVRCL and United Phosphorous (see table). Nagarjuna Constructions, Adlabs Films and KEC International also count among his most successful picks of 2004. Sabharwal is comfortably riding the rally in all stocks, except for Pantaloon Retail, in which he booked profits.

Understanding the management's vision about where it sees the company a few years down the line is important

Infrastructure is another key sector. "If you see the industrial growth at 10 per cent against the expected growth of 8 per cent, this itself explains the potential of the industry." Potential is what makes him like the media sector, too. "It is an evolving industry, and isn't likely to peak out soon," he opines.

If there is one sector, which Sabharwal is bearish on, it is public sector banks (PSBs). According to him, unless managements are going to change, PSBs will find it difficult to grow. Also, the single-biggest negative that one sees about these banks is that the younger generation does not hold accounts with these banks. "This puts a big question mark over their resources," he points out.

Sabharwal, however, had his share of misses for playing conservative. He regrets not investing in Bharti Tele-ventures. "At that time I could not see a subscriber explosion in the telecom industry," he says. All said, Sabharwal likes to play for the long term. "If you enter a momentum play you never know what you are getting into and you tend to be jittery. Also, if you keep getting in and out of stocks, you have to keep constantly looking out for good ideas. Today there are not many good ideas to invest in. So it is safer to bet on the long term," he adds.

And when he is not talking stocks, Sabharwal dabbles in astrology. No, he is not looking at predicting the markets. Markets movements can never be predicted anyway. But after ruminating over a lot of books, Sabharwal says, he has realised that astrology is more of an analytical science. It cannot be practised by ordinary pundits sitting in a temple.

Sure, Sabharwal's analytical skills are coming in handy in his study of astrology. But he's not boasting yet. "I rate myself better as a fund manager now, but over the next few years I would hope to master astrology," he adds.

As for his future, Sabharwal predicts he will become an astrologer in 2017. Till then, SBI Mutual investors can breathe easy.