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IN the last three months, the equity market has remained bullish and there is continued interest from the FIIs and other players to invest in the Indian equity market. When the market is doing well, it is natural that the NAVs of various funds also improve.

For an investor, of course, it is important to see how well the individual funds outperform the broad market and the peers in its category. But what is more important for an investor to observe is to have a close look at the quality of the portfolio of a fund to see how well it is positioned to give a consistent return even if the market turns volatile.

A fund house that has a good investment philosophy and follows a disciplined approach to investment will be the winner. At UTI Mutual Fund, we follow a philosophy that gives emphasis to quality of management in selection of companies and a prudent asset allocation and sectoral allocation policy to deliver consistent and least volatile returns.

Equity market: FII investments into India continue to break new records. The September inflows were the second best monthly inflows so far. At $3.06 billion year-to-date, the inflows are the best in any year.

Given the strong growth in the economy, the fan following for Indian stocks among foreign investors appears to be strong. Anecdotal evidence from various international conferences also substantiates this view.

Among the various sectors, we are positive on the sectors such as automobiles, engineering, cement, banking and steel, which are direct players on the economy. While FMCG companies have so far reported lacklustre growth in topline, the strong rural demands is expected to result in better sales growth in the coming quarters.

We believe that better days are ahead for Indian cement majors. Credit offtake accompanied by lower interest rates are expected to lead to better profits for Indian banks. Similarly, housing finance companies are expected to improve loan disbursements and report higher profit in the next few years.

(Edited extracts from UTI's Bulletin Plus, October-November 2003.)

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