Market Outlook 2014, SBI Magnum Balanced Fund – Mr. R Srinivasan (CIO, SBI Mutual Fund)

MINUTES OF MEETING

Venue Board room, Chandigarh office Date November 20, 2014
Subject Market Outlook 2014-15,

SBI Magnum Balanced Fund

Time 1600 Hrs
Details

Discussion with Mr. R Srinivasan (Chief Investment Officer, SBI Mutual Fund) Duration 45 mins

Participants:

Internal Iqbal Singh, Anuj Singla, Pankaj Sharma, Akaljot Singh, Jagjit Singh, Vishwapreet Singh, Jagdeep Singh
External Mr. R Srinivasan, Mr. Sandeep Sharma

Agenda:

  • Market Outlook 2014, SBI Magnum Balanced Fund

Discussion:

  • Mr. Iqbal Singh started the discussion by asking Mr. Srinivasan dlpwa.com new zealand adult friend finder keygen about his view on the macro picture of the economy.
  • Mr. Srinivasan replied that they don’t do macro analysis that much. Their approach is bottom to top to meet the companies. Nevertheless:
  • Macro Picture
  • Mr Srinivasan said, that what they’re coming to know from the companies is that, on the ground, there is no real improvement. The only positive is the sentiment. Expectations are for ahead of reality. The recovery is expected to be cyclical in nature.
  • Things have been exceedingly bad in FY’2014. In fact in some sectors numbers have been even worse than FY’ 1996.
  • Hence we expect a cyclical recovery and a mean reversion to do it.
  • Market has already started factoring in a cyclical recovery. FY’15-16-17 has already been factored in. Beyond this, market is not factoring it in. austin texas 6th st web cams So valuations are not so expensive also.
  • However, http://jcpuriart.com/spooz/free-older-swingers-personals/ finding good companies is difficult now. If valuation comfort is there, growth comfort is not there. If there is growth in EPS , valuation are unreasonable.
  • On the other hand in many companies, Eg. SKF, it is very expensive, but at least it’s a good company. Similarly, BOSCH. It has gone to Rs 20,000/-. We were expecting it to be a defensive play. But it has run up so much.
  • Risk reward tradeoff is not very attractive. But then Mr. Srinivasan says, he’s usually cautious.
  • On The Balanced Fund side
  • The Balanced Fund is kept as 75% Equity and 25% Debt. Mr. Srinivasan manages the 75% portion. Of this he keeps 40% in Large Caps, and 60% in Mid & Small Caps.
  • So, of the Fund, 50% is safe and 45% is risky.
  • The Small & Mid Cap portions have done very well. That’s why the Balanced fund has done well.
  • Question & Answer session

Q1 Iqbal Sir: If we look at your Balanced fund, relative to its peer group, your PE and P/Book ratios are higher. Any particular reason ?

A: We haven’t really looked at it, and were also not aware. We will need to look into it and let you know.

Q2 Iqbal Sir: Your highest holding is HDFC Bank in your portfolio ? Don’t you think it has underperformed in the last one year ?

A: We can’t look at HDFC Bank from such a short term perspective. I feel it can do in the next 10 years, what it has done in the past 10 years.

It is an amazingly well managed stock and is trading at a PE of 12.

The risks are if Aditya Puri moves out of the bank, but it looks unlikely. Or, the Bank merges with HDFC. We’ll have to monitor these.

It has doubled its branches in the past 3 years, and is investing heavily in Tier II & III http://comercializadoraroma.com/ds/2013/11/08/olivia-munn-dating/ cities. It is a brilliant strategy, and therefore the bank is a good buy.

Q3 Iqbal Sir: You always have a contrarian view, and it pays off well. After Private Banking, you have Auto Ancillary as your major exposure. Tube Investments is present in most AMC’s funds. Any particular reason ?

A: For the past two years, Autos were flat. When recovery comes, Auto Ancillaries do well.

So we bought Ramkrishna Holdings, and Sundaram Clayton which we couldn’t get reative dating enough of.

Tube Investments is a Holding company, holding Chola Investment and Finance, and Shanti Gears. Of itself Tube Investments manufactures cylindrical tubes etc.

We think its valuations are quite reasonable. Upside 10-15% along with business upturn.

Q4 Iqbal Singh: Could you shed some light on Vinati Organics use web cam on hp pavillion ?

A: It is a Speciality Chemicals company, competing against Dow Chemicals etc. It has 60-65% market share and great ROCE.

Q5 Iqbal Sir: If we say, markets have run ahead of fundamentals, what’s your assessment of returns in the portfolios in the next one year ?

A: Frankly, I don’t expect much returns. But momentum is there, so you can’t say.

It is not easy to find 25 stocks today which will double in the next 1 year.

Q6 Iqbal Sir: A direct question – Can I shift money from Debt to Balanced ?

A: Yes secret encounters singles can. But economic numbers will come only after one year. Not right now. Market has run ahead of its numbers.

 

 

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