The Hindu Business Line : `We are relatively less exposed to oil and pharma'

SBI Mutual Fund, says Mr N. Sethuram, CIO, does not wish to write off mid-cap stocks altogether - despite what has been lately happening in the market. "We think there will be considerable activity in the mid-cap segment", he tells Business Line.

He also dwells on a range of issues, including the possibility of debt turning the corner, the near-absence of equity NFOs and some of SBI MF's recent strategies.

Excerpts:

Isn't there a solid case for shifting to large-cap now?

It is not that mid-caps have come to a complete standstill and that relatively smaller companies are not doing anything significant on the business front. In reality, there is a discernible level of activity in that segment regardless of all the downbeat sentiments that some sections have displayed.

However, recent trends suggest that a number of investors are looking at large-cap stocks more actively than before. Such a strategy is likely to be helpful at a time when mid- or small-cap names have flagged radically.

In which sectors are you under-/over-weight at the moment?

There is definite exposure to capital goods and cement, while we are relatively less exposed to the likes of oil and pharma.

As for banks, SBI MF has lately picked up a few select banking stocks. In the case of some public-sector banks, price-to-book figures have looked quite attractive. Dividend yield was also good in a few of these cases.

Further, the information technology sector has thrown up certain opportunities. Incidentally, we have had a well-thought-out strategy in the context of under-performance by mid-caps.

I am referring to what we did when the market suddenly declined after early May. Let me also tell you that we have seen relative underperformance in certain areas.

Our Emerging Businesses Fund has had its own share of issues. More specifically, the textiles sector has not delivered much lately. On another front, we have been bringing about some important changes in a few of our funds.

How do you view the premise that debt funds are turning the corner?

Considering all the major factors, such a serious turnaround, as quarters have started predicting, may not happen immediately, not perhaps in the next six months or so.

But, having said that, I think investors will have to consider fixed-income funds more keenly than before. Some of them will probably have to do this from the point of view of re-balancing their asset allocation in line with the latest sentiments.

There is a little activity in terms of equity NFOs. How do you view this?

Yes, there are no open-ended equity funds to speak of. At another end of the spectrum, liquid funds are active, as they have been historically. However, it is not that fixed maturity plans are absent from the market. There is quite a bit of activity on the FMP front and a number of these products have been lined up by various players.

As for SBI MF, we too have launched some of these in recent times. We think FMPs should not be too small in size... we have mobilised Rs 100-200 crore in certain cases. Also, if you look at the total FMP segment, considering all the players, you will find that it has already grown pretty large.

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