The Hindu Business Line : `We are a bit guarded in short term'

EQUITIES seem to be sizzling, a situation that should serve as a warning to short term investors. Or so feels Mr Sanjay Prakash, Chief Executive, HSBC Mutual Fund.

"The market has beaten investors' expectations on many counts. It is possible that some quarters are staying close to cash after booking profits. This may be the time to wind down a bit," he told Business Line.

Excerpts:

Stocks have run up quite a bit. Is the end anywhere near?

The way the stock market has moved up in recent days has nearly defied logic. That there is adequate liquidity in the system is beyond doubt.

Flows from overseas investors have played a major role in this uptrend. Check the latest FII numbers and you will get a clearer picture.

At the same time, however, some sections seem to be adopting extremely cautious policies. We are more than a bit guarded when it comes to formulating our strategy for the short term. The trend in the short term will not be as favourable as that over the medium and long terms.

Disciplined investors may be advised to exercise restraint at this stage. Regular investments in small doses may be a better option for such people.

So a correction is likely to happen ... .

That may well be the case. But remember, the market is eagerly waiting for the next batch of quarterly results, which are expected to be good this time as well. If people eventually feel that such results are not fully factored in, the market may move again and the pull-back will not happen in the expected manner.

We will know how the scenario will pan out in a few more days. But, to reiterate a point, long term investors have no real cause for worry. There are various reasons to hold up their case.

How are your equity funds poised at the moment?

In terms of assets, the flagship equity scheme is fairly large with over Rs 1,400 crore at its disposal. It is set to declare a dividend with a view to distribute the gains that have been recorded by its diversified basket of stocks.

The newly-launched opportunities fund, which has the BSE-500 as its benchmark, has also turned out a reasonably good score on a six-month basis.

Are new products being planned?

Our portfolio of debt products does not have a floating rate fund yet, and we plan to come out with a floater with both short and long term options.

With this in place, the MF expects to scale up from the Rs 6,000 crore or so that it now handles. To talk about some recent trends, we have gone through a decent year in terms of addition to assets. The last one month saw a fairly high net inflow. We feel that it is better to have a few core products rather than too many.

Having said that, let me add that we may consider another scheme on the equity side. It will not be a narrow, sectoral product. But all of this is still on the drawing board.

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