The Hindu Business Line : Market View

Our macro call on the economy continues to be positive and corporate profit growth remains robust. We have adjusted our portfolios (by reducing the cash levels) to capture the corporate earnings performance during the March quarter. However, large part of the quarterly results season is already behind us and the key corporates have announced results in line with expectations. However, we need to watch out for higher interest rates impacting the bottomline and, in turn, growth rates in corporate earnings.

We are thus following a cautious approach in constructing our portfolio, with a greater focus on visibility of earnings and on absolute valuations. Our funds have an average cash level of around 10 per cent. We remain invested in technology and industrial manufacturing, where we see good long-term earning visibility. We are underweight on interest rate-sensitive sectors such as finance and auto.

ING Vysya Mutual Fund

Our bullish view on the long-term prospects for the economy remains intact. The likely peaking-out in the interest rate cycle and easy access to finance from global markets reduces company-specific financial risk, especially in the mid-cap space. At this stage of the bull market, even attractive stock themes may take longer to deliver value, in contrast to the trends of the past three years. On FY'09 basis and beyond, select stocks (not sectors as a whole) across the cap curve and sectors are attractive. Capacity constraints and effect of higher interest rates on earnings will cease to be significant variables. In this context, our approach will be stock-specific so as to zero in growth stories at available at attractive valuation from this time horizon perspective. There may be a sector or two (media for example), where we may buy the theme as a major change in profile is in the offing over the next three-to-five years.

Sundaram BNP Paribas Mutual Fund

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