The Hindu Business Line : `Index may be range-bound in near term'

CHOLAMANDALAM MF is placing large bets on mid-cap counters. Mr Sashi Krishnan, Chief Executive, is of the view that given recent trends, investors cannot afford to ignore such stocks.

"We have seen the kind of returns that these are capable of providing. Going forward, selecting the right stocks in the mid-cap domain will be of utmost importance," he told Business Line. Excerpts

How are you looking at the mid-cap scenario at the moment?

Investors can hope to be rewarded if they manage to identify good scrips that can be rightly labeled as mid-cap. Opportunities to do so are likely to arise in a number of sectors. Investors must fully use their discretion while choosing.

Mid-caps, if selected well, can seriously boost the overall performance of portfolios. We have veered around to this view after witnessing the way the market has behaved. In fact, our own mid-cap fund, which has recently opened for on-going sales, is based on this premise.

What sort of investments has it made so far?

We are about 80 per cent invested till now. The fund has singled out stocks that have market capitalisations in the range of Rs 300-3,000 crore. The idea is to have a mixed bag, marked by stocks that are proxies for large caps as well as those that are part of the so-called sunrise sectors. Besides, there is controlled exposure to what can be termed as niche segments. The latter have no large cap names.

Can you give a few examples?

Yes. The stocks that have been selected include Finolex, Chennai Petro, Blue Dart and Sona Steering. Some of these add up to about 30-35 per cent of the assets.

The sunrise sectors, which I referred to earlier, account for around 15 per cent of the allocations. These cover themes like pharma outsourcing. Here, we have picked up Vimta Labs. All these allocations are based on research... ours has been an essentially stock-specific approach.

We wish to remain invested in them for the time being. The portfolio has a couple of dozen stocks and we hope to add a few more in the coming days.

You are not referring to tech at all...

Well, tech is an area that is not impacted by rainfall or a lack of it. To that extent, it is significantly protected.

As you would appreciate, there are two major worries as far as sentiments are concerned. These develop from oil prices and the rains. We have, incidentally, increased our exposure to tech in our growth fund. It has moved up from 16 per cent in June to roughly 25 per cent at the moment.

Chola Opportunities too has considerable exposure to IT and IT consulting services.

So what is your broad view of the market?

The index may be range-bound for now and over the near term. That is perhaps more than a simple gut feeling.

As for specific stocks, I see a number of them that should be moving ahead in value terms.

On the economic front, domestic demand is good. Some corporates have already delivered smart results in the first quarter. These trends are likely to remain, at least over the next few quarters or so.

Oil prices should get partially corrected once the US polls are over.

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