Manager Speak: K N Siva Subramanian, fund manager, Bluechip
Banks seem to be your biggest sectoral bet. What makes you so bullish on the sector?
We have increased our exposure to the banking sector, which is a reflection of the strong fundamentals and potential for future growth.
The latest balance sheets of most of the banks suggest that non-performing assets (NPAs) have been coming down, there is focus on quality business with more retail focus, slashing of manpower, investments in technology and so on.
The passing of banking ordinance is also good news. Banks can now reduce their NPAs) and lower the provisioning needs meaning better profitability. In the medium to long term we expect the sector to do well.
Oil stocks figure on top of your portfolio, despite the uncertainty on disinvestment. Why?
The de-regulation of downstream oil sector has improved the fundamentals of oil retailing companies. Demand for petro-products is expected to show strong growth on the back of revival in the Indian economy.
Despite improving fundamentals, these stocks are quoting at lower end of the valuation band with attractive dividend yields. Even if divestment does not materialise, the improving fundamentals should favourably impact profits and, hence stock prices.
After the recent rally in tech stocks, are you skeptical about the pace?
We have since last month upped our exposure to technology stocks as we are confident on the long term prospects of the sector.
However, we believe only top rung companies with brand equity will be able to grow at a good rate. Our talks with various consultants and companies indicate that the new orders could be larger in size.
However, we expect companies with an established clientele and distribution networks to capitalise more from this phenomenon rather than the second rung companies going ahead.
