The Hindu Business Line : `Govt's generous policies to continue in Budget'

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Kolkata Feb. 4 With 14K firmly behind us, stocks today appear more fairly valued than ever, argues Mr Ved Prakash Chaturvedi, MD, Tata Mutual Fund. While the situation calls for even greater caution, investors need to appreciate the factors that may well encourage a further step-up in activity, he feels.

He also dwells on a variety of other issues affecting funds, including pension money, newer product classes and investment in debt.

Looking at valuations, one cannot but feel queasy. Your comments.

I agree they are stretched than before. The market has attracted a lot of investments till this point and liquidity has clearly driven the rally. Stocks across sectors have advanced markedly, leaving people to wonder where exactly the market is heading for. This has been happening over the past few years and some sections seem to have taken it all in their stride.

But it really does not matter whether the market is at 11,000 points or 18,000. What is of consequence is investors' ability to spot the right stocks as early as possible and gain from the advance these stocks record over time.

Do you think sufficient pension money will come to the market, now that this is being opened up, albeit in a small way?

It is early days yet. There is no point is speculating how much will come in. The important thing is that a beginning has been proposed, courtesy this initiative. I am talking about possible investments in equities. The funds industry will wait for developments. The news that has trickled in so far suggests that the market expects a lot on this front.

As I said, it will be some time before this starts making a real, substantial difference. Pension money, we need to understand, is a big issue internationally and India is a market that can attract quality money.

Any expectations from the Budget?

As far as the funds industry is concerned, we hope that the government's generous policies will continue. Funds have in the past succeeded because of a number of friendly principles followed by the authorities. Recent times have seen the adoption of several measures, each aimed at addressing a specific issue.

The proposal to introduce of MIN, for instance, has been an interesting step, although this is meant only for applications of Rs 50,000 and more.

Is there scope for adopting a different stance on debt allocation?

One would generally urge investors to remain focused on shorter duration options. They should keep a clear watch on the key indicators, including signals from global sources. There is also reason to minimize mark-to-market risk on portfolios. Let's see how interest rates behave this year. Inflation trends will also need to be watched carefully.

Are you planning a Gold ETF, now that this will clearly become a full-blown product category?

We have examined the possibility and have filed an offer document with SEBI. Some players have gone ahead and filed theirs. The general belief is that there will be more. Of more immediate relevance were capital protection oriented products, a number of which have been mooted so far. These in a way make us convinced about the industry's innovative traits.

In fact, there is no reason to suspect that product innovation on the debt side has ended. At another level, we expect more activity by local funds on the overseas investment front too.

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