Issues from good companies will bring back small investors

Our fund has shown steady growth so far and the net asset value of the fund has outperformed the 30-share BSE Sensex over the last one year. The strategy ofrestructuring and pruning the numbers of scrips in the portfolio has provided good results… the fund has increased its exposure to scrips in the consumer goods, pharma and software sectors.

The stock markets are bouncing back after a bearish phase. What do you attribute this to?

I think the temporary disillusionment of the FIIs with the Indian stock markets is over. As the effects of the sanctions are finally cooling off, the players are understanding the value of our stock markets. SEBI’s decision to ban the short sales also helped the markets to revive. With the good corporate results expected in the first quarter of the current fiscal, the markets would stabilise at around 4,000 points by September.

The statements made by the finance minister in Mumbai recently that there is nothing to worry and we should not panic also helped the players to gain confidence into the Indian market.

What do you think went wrong with the stock markets?

I think it was due to three main factors thatthe markets had crashed. One, there was some nuke explosion fall out, then we had some anti-protectionist fall out. Finally, the FIIs have taken an incorrect view on India based on incorrect information. Moody’s and S&P downgrading and the payment crisis have also hit the sentiments. Though the anti-dumping duty imposed by the government was not welcomed by the foreigners…the protection given to the domestic companies is a step taken in the right direction.

The Union budget has failed to revive the markets… what do you think needs to be done to bring back the small investors to the markets?

The stock markets are crashing due to other reasons than the Union Budget. Our fundamentals are strong, corporates have performed well and the markets have a wide base. I think it was due to overreaction by the FIIs which went on a selling spree. There cannot be any other good markets among the emerging markets as the Indian stock markets.

In order to bring back the small investors, new issues must befloated at a right premium. There should be some balance between the new primary and secondary markets. In the recent past, bank shares have invited good response which proves that there are takers for the good issues managed by good promoters. If more good companies come out with the issues, small investors would come back.

What do you think about the excessive speculation in the stock markets?

Our stock markets have enough in-built protection measures like margins, circuit filters and badla charges to take care of the excessive speculation. As long as speculation is productive and brings the markets to its correct valuation, it would serve its purpose but beyond that, as it recently happened in few scrips, adverse effect will trickle down on to the entire stock market. Time has come to tighten the instruments to check excessive speculation.

Do you think the depreciation of Japanese Yen will hit the Indian exports?

The Japanese currency has fallen against the US currency in the lastfew weeks which would not directly hit the exports. But the resultant slump in the Asian region will certainly impede export growth. Any change in the value of Japanese Yen can result in a worldwide recession which is not good for emerging markets like India.