KEA: Do you think markets are overheated? If yes, then should we
Vinay Kulkarni, senior fund manager, HDFC Asset Management Co Ltd Kaushik Chakravorty/Mint
Kulkarni: Valuations are reasonable. Growth should be back on track in FY11. So, I think one should remain invested.
KEA: I think in 2007 your HDFC Taxsaver’s performance went down sharply compared with many other funds. What was the reason?
Also See | HDFC Taxsaver Fund (Graphic)
Kulkarni: Discomfort with high valuations kept us away from sectors, such as real estate, power utilities and NBFCs. These sectors outperformed the market. Since HDFC TaxSaver was underweight in these sectors, it underperformed in 2007.
Pine: Which sectors do you think would outperform the market in the coming six months and why?
Kulkarni: Currently, we see good prospects for the banking sector, led by robust credit growth in FY11, engineering and infrastructure sector based on revival of the capital expenditure
cycle, IT sector as a play on global economic recovery, pharmaceutical sector based on company-specific positive drivers and the fast-moving consumer goods sector based on the Budget which has left more disposable income in the hands of the salaried class.
Kusum: Post Budget, how do you see the investment environment shaping up?
Kulkarni: The Budget has given a boost to consumption by increasing disposable income in the hands of the salaried class. Also, the return of fiscal discipline should cap inflation expectations. The government’s intention to be an enabler and ensure the right environment for private enterprise is also a boost for private sector entrepreneurs.