| Transcript of Chat with Mr. Nishid Shah ( Asst. Vice President - Investments, Fund Manager - Birla Equity Plan) - Is tax saving plan an ideal mix of tax saving and equity investment? (01/02/2002) |
[04:06:32 PM] => Myiris : Welcome to the live chat session.
[04:08:31 PM] => Myiris: Our guest today is Mr. Nishid Shah, Asst. Vice President - Investments, Fund Manager - Birla Equity Plan, Birla Sun Life AMC.
[04:09:11 PM] => DISCLAIMER:
[04:09:50 PM] => Mr. Nishid Shah is the Asst. Vice President - Investments, Fund Manager - Birla Equity Plan, Birla Sun Life AMC. At the time of this conversation / chat, Mr. Shah may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Shah is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Shah, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:10:08 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:11:23 PM] => Lastly the views expressed by Mr. Shah have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:11:36 PM] => Myiris : Welcome to the chat session Mr. Shah.
[04:12:27 PM] => gesbi-traineem : What exactly are Personal loans?
[04:12:36 PM] => NS : No Comments.
[04:14:45 PM] => mahesh652000 : Please suggest low risk scrips for medium term investment?
[04:15:04 PM] => NS : There are several low risk scrips for a medium term investment. Many of them you will find in our portfolio for exp. Bharat Petroleum, Britannia, E. Merck, Glenmark, Grasim, Hero Honda, Hindustan petroleum, Pfizer Wyeth Lederle etc.
[04:17:32 PM] => Nagesh : Sir, I am an investor with Birla MF. Could you explain how tax schemes will benefit us?
[04:20:06 PM] => NS : There are two distinct advantages - Investor gets Rs 2000 deduction in payment of tax on an investment of Rs 10000 in a tax savings scheme & investor also gets a benefit of a growth in equity - in fact since the funds are locked in for 3 years, the fund manager is in a better position to invest in a value stock and wait for the investment to give return for a sufficient amount of time.
[04:22:51 PM] => MK23 : How do you rate the market as of now? Has it seen the bottom?
[04:24:49 PM] => NS : We are cautiously optimistic for the equity market in India on a one-year perspective. Over the last twelve months, we have seen market going down significantly due to variety of reasons. However if one looks at the situation now, most of the leading scrips are heavily oversold, valuations have become attractive and interest rates have come down significantly.
[04:25:49 PM] => Buybacks, open offers and creeping acquisitions lead to inflow for the retail investor, which in turn is likely to find way, back to the equity market. CRR cut and slowing credit off take have led to a significant liquidity in the market. High liquidity in the system, falling interest rates, low level of inflation and attractive valuations represent a strong combination for a foundation for upward move in the equity markets.
[04:26:13 PM] => MK23 : What is the future of US-64? Will there be another bailout?
[04:26:51 PM] => NS : No comments.
[04:27:56 PM] => SS36 : Please suggest a good equity scheme to put my money in. Is it a right time to get in to equity funds?
[04:28:31 PM] => NS : At a time when there are all ingredients in place for a good upward move in the equity market, One must look at investment in a pure equity fund and Birla Sunlife Mutual Fund has several equity schemes like Birla Equity plan ( BEP ) – with sec 88 benefit , Birla Advantage Fund, Birla MNC fund and Birla IT fund .
[04:29:15 PM] => High liquidity in the system, falling interest rates, low level of inflation and attractive valuations represent a strong combination for a foundation for upward move in the equity markets. As such timing wise , this is a right time for investment in equity. With good monsoon and better distribution of rainfall, revival of rural demand is also expected. Introduction of the individual stock futures, options and margin trading will lead to more and more investor interest, liquidity and hedging options. These measures will go a long way in laying down a strong foundation.
[04:30:15 PM] => Mano-kul : Which IT scrips look good short-term?
[04:30:53 PM] => NS : I strongly suggest that one should invest only with a medium term outlook in the volatile market. As far as good IT scrips, one may look at Digital and Infosys.
[04:35:00 PM] => V. J. Singh : Sir,What's your outlook on Pharma sector?
[04:36:44 PM] => NS : The outlook for the sector seems positive. There are large opportunities to tap in the developed countries in generic market. Indian companies have been working on research & development front for last several years and we have started to see the benefits of this. Ranbaxy‘s Cipro deal with Bayer and Dr. Reddy’s deal with Novo Nordisk and Novartis are just glimpses of what is likely, going forward. There are several other companies, which are at various stages in innovation. The payoffs in case of innovation are very large.
[04:37:00 PM] => Besides there is a significant opportunity for the industry to tap the large export market in developed and developing nations. As seen in case of Pharma sector has performed very well over the last one year. The opportunity is to leverage the low cost advantage and the availability of the scientific talent in the country to improve the market share in the worldwide pharmaceutical market.
[04:38:26 PM] => Sana : How do you rate Satyam comps?
[04:38:45 PM] => NS : No comments.
[04:40:36 PM] => Saran : Where do you see the Sensex at the end of March?
[04:40:44 PM] => NS : No comments.
[04:40:54 PM] => Freddie : Hello sir, Is CMC a good bet at current levels?
[04:41:06 PM] => NS : No comments.
[04:42:28 PM] => Pradeep : What's your expectation on the budget? Will MFs benefit?
[04:43:42 PM] => NS : Budget should give thrust on to infrastructure development and housing apart from continuing with the ongoing reforms. Investment in to Mutual funds should be encouraged through more tax incentives.
[04:45:05 PM] => Ravi kanur : How do you rate Birla Equity against other equity funds?
[04:48:35 PM] => NS : I can tell you about what we do and what is our methodology - We believe that, if the approach is right, good results will automatically follow. All our decisions are taken after careful research and discussion within the investment team. This way we avoid investing on hearsay, and also avoid the risk of a single individual missing important issues. Our approach is based on having a very good understanding of a few, carefully chosen companies rather than having a superficial understanding of a lot of them.
[04:50:17 PM] => These few companies are chosen after applying strict performance criteria on a large sample, and only the best prospects are given further attention. Roughly 50 percent of the time of our investment team is spent outside the office, in researching the prospects of companies. We undertake critical examination of all our successes as well as failures on an ongoing basis. This not only helps in taking timely corrective action, but also upgrades the standard of decision making of the investment team as a whole. All our actions are discussed and documented in detail, so that the investment process becomes strong, and dependence on any one member of the investment team is minimized.
[04:53:03 PM] => Guest : Please tell me about your portfolio allocation?
[04:54:55 PM] => NS : Currently we have around 29% in pharma, 16% in software services, 13 % in FMCG and around 8 % in oil companies ( BP/ HP ). Cash level is around 10%.
[04:56:35 PM] => E-invest : Sir, How do you see the performance of equity funds in the coming year? Without the market situation improving, how do you expect the performances to go up?
[04:58:00 PM] => NS : We expect the market to improve as stated earlier. However our investment approach is that of bottoms up stock picking and as such we invest into companies wherein we see significant growth opportunities over a period of time. As such our portfolio over a period of time should deliver superior returns.
[04:59:46 PM] => Ratan : Sir, Does Birla offer any gilt schemes?
[04:59:56 PM] => NS : Yes, We have Birla Gilt Plus.
[05:00:56 PM] => NG76 : What's the funda behind tax saving schemes?
[05:02:57 PM] => NS : As stated earlier, you get a tax incentive through sec 88 for upto Rs 2000 on an investment upto Rs 10000 besides equity returns which on a long term basis have been better than any other investment like bank deposit or investment in gold.
[05:14:42 PM] => w2wvikram : Can I invest in HFCL?
[05:15:04 PM] => NS : No comments.
[05:15:15 PM] => Guest-4 : Are you planning to come out with sector funds?
[05:16:22 PM] => NS : We have Birla MNC Fund and Birla IT Fund and as of this movement we do not have any intention for any other sector fund.
[05:16:32 PM] => Sarandip : Sir, Which pharma scrips do you suggest medium-term?
[05:16:47 PM] => NS : We have investments in Dr. Reddy’s, Cipla, Pfizer, Ranbaxy, Sun Pharma , Glenmark, Wyeth Lederle and Glaxo. All these companies in the sector represent an opportunity for a medium term.
[05:18:31 PM] => Santosh : Will the tech rally last? What is your outlook for the tech sector for the next 6-months?
[05:19:12 PM] => NS : One will have to keep a watch on the valuations. There are opportunities within IT sector but then at a price. The problem is that the move within the sector is so fast that what seems attractive may become fully prices within weeks.
[05:19:35 PM] => Overall we feel that the longer term outlook for the software services companies from India is good as they have competitive advantage and a lead over the companies from toher developing countries.
[05:20:34 PM] => biz_new : What is Birla Equity scheme's cash position? Could you tell me, briefly how the asset allocation has been for the last 3 months?
[05:20:56 PM] => NS : I have already mention this earlier. Currently we have around 29% in pharma, 16% in software services, 13 % in FMCG and around 8 % in oil companies ( BP/ HP ). Cash level is around 10%.
[05:22:31 PM] => Amit : Do you think equity funds are doing justice to the investors, with the kind of returns they are giving?
[05:23:35 PM] => NS : The returns have to be seen on a longer term basis. Equity funds during the boom time have given over 100% return and have paid large dividend also. However with the overall market going down, there is a limit to which a fund manager can protect the fall in prices. I feel that many funds have outperformed the sensex over the last four five years.
[05:24:24 PM] => AR : Is this a good time for stock picking?
[05:24:37 PM] => NS : Yes indeed, Please see my comments earlier on the outlook for the market.
[05:25:29 PM] => Narayan : What kinds of tax benefits does Birla MF offer?
[05:26:06 PM] => NS : Besides all the normal tax benefits that a mutual fund enjoys, Birla Equity plan is a tax savings scheme and as such under section 88 you are entitled to a rebate in your tax payments to the extent of 20 % of the investment subject to a maximum of Rs 10000 investment.
[05:28:04 PM] => HDas : As a fund manager, how do you go about choosing scrips for investing?
[05:29:17 PM] => NS : BEP will follow conservative investment approach. It will pay special emphasis on consistency of performance, productivity of capital, Cash generating capability (EBIDTA minus capital expenditure), franchise companies, and management track record. Even if all these parameters meet, we would still not invest if it is not available at a discount to its intrinsic value. Our idea of intrinsic value is not just the discounted value of the future cash flow but would include a lot more tangible and intangibles - competitive business position, key managers, growth potential, franchise qualities, opinions from the supplier & customers, industry economics and dynamics, regulatory frameworks, shareholder orientation and ability to allocate excess cash flow. Over the long term, the market price for any business should move towards its intrinsic value.
[05:29:28 PM] => We would follow the bottom up stock picking approach while investing. We are looking at companies wherein we see a potential for doubling of earnings over a four years time frame. We would certainly avoid concentrations in holdings. Thus this investment philosophy has the best of both worlds - upside potential and the comfort of owning a business with a margin of safety.
[05:30:27 PM] => Akanaria : Your view on the media sector?
[05:31:14 PM] => NS : There is a significant potential for the media sector over a period of time.
[05:31:32 PM] => Rohit : Is Birla MF coming out with more equity schemes? If so, what will be the difference?
[05:32:51 PM] => NS : Yes, we are planning something but it is still not finalized and at an appropriate time we will communicate.
[05:33:21 PM] => Invest : What do you think of the interest rate scenario?
[05:33:55 PM] => NS : We have seen a significant drop in rates over the last one year and with the 10 year G sec yield around 8 %, there may still be a scope for a 50 basis point drop over a next six months however this depends a lot on several other factors and hence one can not say with surety.
[05:35:18 PM] => RK89 : Whats the difference between Birla's equity fund and other funds?
[05:35:31 PM] => NS : Our investment philosophy and the methodology as stated above.
[05:38:26 PM] => N.Menon : Whats been the returns on Birla Equity Plus?
[05:41:31 PM] => NS : For BEP, for an amount of Rs 10,000 invested at Rs 10 per unit, as of Jan 29, 02, the value of investment is 12440.00 (NAV as of Jan 29, 02 - 12.44)
[05:43:31 PM] => For BTP 98, for the same amount the value of investments as on Jan 29, 02 is Rs.15024.24. (NAV as of Jan 29, 02 - 24.79)
[05:45:05 PM] => Myiris : Thats the end of the chat session for today. We have been inundated with questions and apologise for not being able to carry all the queries.
[05:45:23 PM] => Myiris : Thank you all for logging on.
[05:46:20 PM] => Myiris : Thank you Mr. Nishid Shah for sparing time to come on myiris chatmasala.
[05:46:42 PM] => Myiris : We look forward to seeing you all again very soon.
[05:47:02 PM] => Myiris : Bye for now and have a nice weekend!
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