The Hindu Business Line : `It will be difficult to make money from equities'

Fund managers are nurtured in the cradle of experience, they are not made in classrooms. Or so feels Mr Raamdeo Agrawal, Joint Managing Director, Motilal Oswal Securities (MOSt).

He also shares with Business Line his views on the state of the market, its direction and factors that can change its course.

Excerpts:

The market seems to be riotously happy. Where do you see it going this year?

While there is no denying that economic growth is taking place, I still feel it will be more difficult to make money from equities in 2006. There may be significant volatility down the road, a situation for which investors should be prepared. This year, even if the index is down, say to the extent of 15 per cent, a section of our corporates will continue to turn in smart performance.

Out of 5,000 or 6,000 companies, may be 500 will do extremely well. This will help in keeping the interest in Indian equities alive.

You don't think the end is in sight?

It is true that critical factors - our massive oil bill included - cannot be wished away. One may also think of a possible slowdown in exports, which will partly play the spoiler. But even if such things get out of proportion, investors should still focus on companies that are consistently building wealth. These are companies that are accepted for their earnings capability, displayed over a span of time.

Let me, however, add a caveat: the future for such companies may not always be as promising as their past.

Which sort of companies will fit the bill?

Let me answer this by saying that corporate earnings growth of 14-15 per cent will not be too difficult to achieve. The future will see the creation of new winners, while a number of old leaders will maintain their position. There will be forces of globalisation that will create opportunities for Indian companies.

Is there scope for more PMS variants for MOSt clients?

Well, we may work out more options with certain themes. There may be a choice for those interested in arbitrage... it is not finalised yet. An important issue here is to find good fund managers. The latter, you will appreciate, are not made in classrooms.

Experience renders them different from the rest. In future this will be a key issue for players, which offer portfolio management services.

You have started buying smaller outfits...

Yes, it is a way to grow. In Andhra Pradesh, for instance, we took over a firm called Gayatri Capital. Such moves will help us consolidate our presence.

In the northern region, where we do not have a major presence at the moment, we are trying to expand our network.

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