The Hindu Business Line : `Sectors oriented towards infrastructure will do well'

MR VED Prakash Chaturvedi, Managing Director of Tata Mutual Fund, is not known for one-liners. All the same, he puts it bluntly when asked about the strategy that an average investor should adopt when it comes to investing in stocks.

"It pays to have at least a medium-term view," he says. He also shares some of Tata MF's plans with Business Line.

Excerpts:

The equity market is lately quite volatile. Shouldn't the average investor stay away from the uncertainty this leads to?

It's true that the market has run up quite sharply. We have reasons to feel that it will consolidate around the current levels.

Retail investors will have to decide whether they are in the market for the long term or for the short term. We firmly believe that the way to invest in equities is to have a medium-term view.

The reason is simple - such a strategy can create the maximum value. We advise individual investors to simply put in regular sums of money in equity funds. The whole idea is to invest a fixed amount every month over a long period of time.

Are some sectors likely to be re-rated in the days ahead?

We believe that the infrastructure growth in India would provide opportunities for creation of value by companies that contribute to this sector. The way the policy environment is shaping up, our stance should get vindicated in the future.

Just consider the recent announcement on hike in the FDI limit in telecommunications and you will know what I am talking about.

As we see things, sectors oriented towards infrastructure will continue to do well in this country. In fact, in an economy like ours, there is enormous appetite for the creation of better infrastructure. Policy makers too are increasingly responding to the need.

In line with this, companies that benefit from and contribute to the growth of infrastructure will do fine. And it is this set of companies that are likely to see a re-rating by the market.

Are you over-invested in some sectors at this juncture?

If you take a look at our portfolio statements for the month-end, you will find that we have been positive on certain sectors. The reference here is to the equity products that we currently manage. Tata MF has a number of equity schemes, each with distinctive characteristics. The areas that we are talking about in this context include oil & gas exploration, oil & gas refining and marketing, steel, textiles, metals and engineering equipments.

What can investors expect from Tata MF by way of new funds?

Our sense is that India continues to be a story where basic competitive advantage will derive from intellectual property and the low-cost skilled human resources.

In fact, both are available in plenty in this country. With this serving as the main backdrop, we are focusing on launching a fund that will zero in on service industries. We had been actually working on some ideas in this regard and these led us towards a product tuned to service industries. We hope to launch it in a short while.

To reiterate, the fundamental plan is to leverage on India's competitive advantages as well as the growth of services in a burgeoning domestic economy.

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