The Hindu Business Line : `Debt scenario has lately been marked by high inflation'

THE government's latest stand on PSU disinvestment may yet be a boon for the equity market, while the impact of rising international crude oil prices may be quite negative, feels Mr Sandeep Dasgupta, Chief Executive Officer, Deutsche MF.

"Equities can still spring a surprise, so be optimistic. But don't try out equity funds for merely a few months," he warns investors.

Excerpts:

Practically no body wants to look at income funds. Your comments.

Yes, a general nervousness among investors, including those who have traditionally invested in these schemes, is evident. The debt scenario has lately been marked by high inflation.

Banks have been looking at certain funds differently after witnessing some negative trends. RBI is keenly observing the situation, especially with a view to monitor key factors like liquidity.

The good thing is that the credit offtake has improved... there is no denying that borrowing levels have gone up.

The market is waiting for the next credit policy, though we don't think there will be too many new things in it. A hike in CRR may not happen. All said and done, it will take a while for people to consider bond funds actively again.

In fact, it may not be easy at all for these funds to get back all the money that has gone out of the system.

With regard to equities, how do you think will the market pan out?

Well, all of us have been talking about a correction for some time now. The stock market has indeed become somewhat over-heated, thanks to the buying interest that has been so palpable. The situation has led some sections to think that a breather is necessary at this stage.

However, corporate earnings have been good lately and it looks as if companies will be proving their worth this time as well.

International oil prices have been moving up, which is of course a significant issue. This may have a serious bearing on investors' sentiments in the domestic market.

Let me add that a correction may turn out to be quite healthy. Yet, the market may not really decline in the expected manner.

The government, for one, seems to have adopted a courageous stand on a number of issues, especially with regard to divestment of public sector companies. The overall effect of this may be positive.

Is there scope for getting good returns from equity funds now? Where do Deutsche MF's equity schemes stand at the moment?

You may well lose money if you invest only for the short term. We are urging clients not to consider equity schemes for just a few months. A longer period - may be for a duration of one-year and more - is definitely prescribed for those who can afford to remain patient.

Alpha Equity Fund, which happens to be the flagship scheme, has done reasonably well in recent times compared to some of its peers. So has the more recently-introduced Investment Opportunity Fund. Together, they manage close to Rs 180 crore.

The MIP also has a small equity component. To add a point, new schemes are not currently in the pipeline.

More Stories on : Interview | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
No advantage, global investing

Better to stay close to cash funds

Crude reality may hit sentiment further

Strong show by IT counters

As you fear shadows, there's light shining somewhere

`Debt scenario has lately been marked by high inflation'

NTPC issue attracts $15b, 260 FIIs

Indoco files draft prospectus for IPO