Investing Trends

Franklin Templeton Investing Managers is the 6th biggest plus direction company in the state with AUM of Rs 26,842.22 crore (as on March 2008) and an investor alkali of Rs 25 lakh. The monetary fund house essentially follows a bottom-up approach. Its head investing officer, Sukumar Raja is of the position that this is the most opportune clip for common finances as the stock terms have got corrected sharply. Excerpts from an interview with Vandana and Tinesh Bhasin:

What's your return on the Sensex? Can it travel below 11,000?

Investors have got a inclination to extrapolate. When the Sensex was trading at 20,000, people spoke about the 25,000 levels. But with the Sensex shrinking, people are seeing a downward trend. There is a batch of support at less levels.

Global investors are buying into the Republic Of India growing story, along with the domestic institutions. A large portion of the volatility is behind us. There is not much downside left for the quality companies. I don't see the Sensex going below 11,000.

FIIs are coming back to the equity marketplaces as nett buyers. How make you see this scenario?

FIIs are not a homogeneous set of investors. There are gifts and pension finances who take a long-term view on the markets. They stayed away at the extremum and are buying at current levels.

However, there was a batch of hedgerow monetary fund activity in Republic Of India prior to the marketplace crash. Hedge finances are basically impulse investors and their activity will worsen additional from here. More value investors will come up now as assets are shrinking.

Do you believe the evaluation foam is over?

The current evaluations are reasonable, considering long-term opportunities. The Sensex looks attractive, trading at a pe of 15-16 modern times forward earnings. There are some very good purchasing chances in telecom and PSU oil companies.

Among the fiscal services, the environment for Banks and particularly commercial Banks is not good. We have got made some major alterations in our portfolio by adding substructure and construction.

What's your position on the existent estate sector?

We are underweight on this sector. The projections are too optimistic as they are based on land depository financial institution valuations. Developers believe they can sell a batch of flats at a high value.

What do you make out of the corporate earnings?

I believe there is disappointment. Corporate net income growing would come up down substantially. Companies have got been punished for seeking short-term profits in forex derivatives. Margins will decline, but from a five-year perspective. The grosses will turn in a 20-22 per cent range.

Will the weakening dollar affect earnings?

The dollar is currently undervalued. It have weakened as much as it have to. It should appreciate in the short and medium term. The Sri Lanka rupee will emerge as a better currency in the long term.

How make you happen the recently launched stock loaning and adoption chemical mechanism (SLBM) and short selling? When make you see them picking up?

I believe the chemical mechanism makes not substance much for long-term investors. There have been significant short-selling inch the last few months. There are too many short pants and not many optimists in the market. It will take clip for the new chemical mechanism to pick up. Information escape is another issue.

When you are short on a stock, the escape of information can squash you. So, we necessitate more than information security. I believe it will take clip before the chemical mechanism actually picks up momentum. We as a grouping will wait for the chemical mechanism to stabilise first.

What are your chief challenges this twelvemonth as a common monetary fund house?

Handling investors in this sort of an environment is hard for the gross sales department. Many of them are wary of investment after the crash.

As an investing team, we are not doing anything different from last year. We are focussing more than on cardinal research. In fact, the current marketplace scenario supplies more than value investing opportunities. So, it is positive for common funds.