=> Myiris: Welcome to the Live Chat Session
[04:31:26 PM] => Myiris
: Our guest Ms. Chandan Desai, Head - Equity, JM Mutual Fund
will be joining us shortly
[04:32:11 PM] => DISCLAIMER
[04:33:03 PM] => Ms. Chandan Desai
is the Head - Equity, JM Mutual Fund. At the time of this
conversation / chat, Ms. Desai may or may not have positions
in the stocks mentioned below, although holdings may change
at any time. The views expressed by Ms. Chandan Desai 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. Ms. Desai, 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.
[04:33:54 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.
[04:34:17 PM] => Lastly
the views expressed by Ms. Desai 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.
[04:35:02 PM] => Myiris : Welcome
to the chat session Ms. Desai
[04:35:39 PM] => Mittal_S: I have
put in money in the growth fund of a leading company. Now
the NAV has depreciated very much. So should, I wait or exit
out of it and put it in some of the income fund?
[04:36:58 PM] => CD
: Before taking any decision, please see the asset allocation
and portfolio of the fund in which you have invested. If the
allocation is heavily skewed towards any one sector and the
portfolio consists of second line stocks, you should exit
[04:37:15 PM] => However,
if it is a well-diversified fund consisting of well-established
industry leaders, then this is a wrong time to exit. Though
current scenario for equity markets is quite uncertain, the
valuations of most of the bluechip stocks are at an attractive
levels and a 6-8 months wait at this juncture should yield
[04:38:19 PM] => Sanju kadam :
When do you see the RBI cutting interest rates now that fed
has already done a rate cut?
[04:40:05 PM] => CD
: Since long, RBI has been talking of bias towards softening
of interest rates and a cut looks due in the near future.
[04:40:38 PM] => BehlR: How can
investors identify good performing equity funds?
[04:41:24 PM] => CD
: In order to identify a good performing equity fund, you
will have to compare performance of the fund over various
period like 1 month, quarter, half year and a year as against
certain benchmark indices like Sensex or Nifty. A fund which
has been beating these benchmark indices on a consistent basis
can be considered as a good performing fund.
[04:42:43 PM] => Sanjayn: Please
give me one good pick each from Pharma and FMCG?
[04:43:39 PM] => CD
: Though as per recent SEBI guidelines, we can’t recommend
any particular stock, but the leading domestic pharma companies
and MNC FMCG companies look ideal investment bet.
[04:44:18 PM] => Reddy G: How
would you compare the performance of your funds?
[04:45:55 PM] => CD
: Our debt funds have been doing extremely well for quite
sometime and JM Income Fund (bond scheme) has got CPR-1 ranking
from CRISIL for last 3 consecutive quarters. JM Basic Fund,
the petrochemical sector fund has give appreciable return
of 35 % in the last 2 years.
[04:46:22 PM] => Though
equity schemes have been showing negative performance in last
1 year in line with the industry, JM Balanced is one of the
top performers in its category and we have been able to beat
the industry average in most of our funds.
[04:46:45 PM] => Sanjeev_K: What
do you think for the market in a one-month horizon?
[04:48:14 PM] => CD
: We expect market to remain vulnerable to any deterioration
in the current US-Afghanistan situation. Even though most
of the asset price destruction has already taken place, we
feel that market can further drift downwards in the immediate
term if there is one more attack on US by terrorist group
being attacked in Afghanistan.
[04:50:04 PM] => Manish90 : When
do you feel the current down turn would change?
[04:50:57 PM] => CD
: Indian stock market has been showing persistent downtrend
over last few months due to weak global sentiments, discouraging
economic numbers, downgrade of rating by leading rating agencies,
problems at the country’s largest Mutual Fund. Over and above
that, like other countries around the world, we were also
getting affected by slowdown in the US economy as our technology
business is mainly dependent on US.
[04:51:27 PM] => With
the current military conflict between Afghanistan and US,
the US economy has been pushed over the edge and has a possibility
of going into recession. Thus, the current scenario can further
worsen into an extremely adverse situation. But normally at
such times market bottom out and we foresee the same happening
in next 3 months.
[04:51:58 PM] => Joshua : Which
sector would be the next fancy of brokers in the near term
[04:53:32 PM] => CD
: Currently, all market players are realigning themselves
towards defensive sectors and we think that after pharma it
may be turn of FMCG counters as these 2 sectors are comparative
insulated from economic downturn.
[04:54:21 PM] => Yousuf_A : What
is your take on the Equity markets with the government contemplating
the interest rate cut?
[04:54:46 PM] => CD
: Though there may not be any immediate impact of interest
rate cut as the situation in equity market is quite vulnerable
to current conflict in the region, any rate cut augurs well
for equity market over long term.
[04:55:28 PM] => With
declining interest rates and stable/ upward moving inflation
rate, it will be a must for people to park at least some of
the savings in equity markets to generate decent returns.
[04:55:42 PM] => Hariharan : What
are the target returns fund manager is planning for the JM
[04:57:09 PM] => CD
: JM Basic Fund is an oil and gas sector fund. Though current
mayhem in the market has affected this sector also, we see
a lot more opportunity in this sector with scheduled dismantling
of APM in April, 2002. Though the actual return will be dependent
on the market conditions, we target a 20-25% return from current
[04:58:55 PM] => Shah_ketan :
Any Chance of a new fund based on the Pharma coming from JM?
[04:59:33 PM] => CD
: Though we are mulling about the idea, the final decision
in not taken as yet.
[05:00:49 PM] => Parikh : Now
that Fed has cut rates for the 9th time this year do you see
the steps they have taken through these rate cuts reversing
the down turn?
[05:01:24 PM] => CD
: In a normal situation, the 9 cuts by Fed over last 10 months
should have started reversing the US economic scenario. But
the 11th September attacks may delay this reversal. Till then
US economy was mainly facing problem of reduction in business
spending, but now it may lead to slowdown in consumer spending
[05:02:01 PM] => For
long, consumer spending has been the growth engine of US economy
and with this engine slowing down, it will take some more
time for rate cuts to show desired result.
[05:02:15 PM] => Yadav56 : Can
you tell me something about JM Equity's asset allocation?
[05:02:43 PM] => CD
: At present JM Equity has 60% in equities, 10% in G-Secs
and 30% in money market instruments.
[05:06:03 PM] => Godwan : You
were holding close to 6% of Infosys till August 31-2001 inspite
of the tech meltdown. Why are you still holding such a big
[05:06:26 PM] => CD
: Though the technology scenario is not appearing to be very
bright at present, we feel that only industry leaders like
Infosys and Wipro can survive this downphase and yet come
out as winners.
[05:07:09 PM] => Also
the fact that Infosys can still show 25-30% growth rate goes
in favour of that stock as with discoursing economic numbers
so far, we can hardly expect any domestic economy related
stock to show good numbers (except for pharma).
[05:07:39 PM] => Nilesh: What
are your views on the future direction of the Indian Mutual
[05:08:30 PM] => CD
: Indian Mutual Fund Industry has gone through a lot of ups
and down over the years and should be able to sustain current
downturn. We see a further consolidation in this industry
as small players will have to join hands with bigger ones
[05:09:12 PM] => After
this consolidation phase, we will see more strong players
operating in the market.
[05:10:17 PM] => Kurien.kt : Given
the current scenario, what do you recommend to invest in -
old economy or new economy?
[05:11:17 PM] => CD
: In the current scenario, valuations are attractive for both
old economy as well as new economy. But as new economy, especially
technology sector is largely dependent on US economy which
is in vulnerable position, it is advisable to stick to old
economy at present stage.
[05:12:12 PM] => Ramnath : Now
that the US economy is in a recession, where do we go from
[05:12:35 PM] => CD
: The US economy was already fragile before the recent attacks
on account of curtailment in business spending. But now even
consumer spending in US may get affected with mounting layoffs
in airline, technology, entertainment and hotel industries.
[05:12:59 PM] => Though
to a great extent India is insulated from the recession in
US economy as exports account for only 10% of GDP, slowing
US economy is bound to have impact on India also, especially
on the technology sector. Any major pullout by FIIs on account
of uncertainty in the region can also affect the market in
a very adverse manner.
[05:14:30 PM] => Thus,
we may see a further adverse situation in the short term and
a volatile market. However, normally markets bottom out in
such extreme adverse situations and yield good return over
[05:14:45 PM] => Major54 : Can
you tell me the current cash levels in each of your funds?
[05:15:07 PM] => CD
: JM Equity Fund is having 30% cash and JM Balanced is having
[05:15:50 PM] => Tushar-H : Why
should I invest in a Mutual Fund when most funds perform as
miserably as they do in India?
[05:16:04 PM] => CD
: When markets face a downturn, both direct equity investment
as well as mutual fund investments show negative returns.
But in direct investments, one may put all his eggs into one
basket whereas Mutual Fund schemes never put all money in
1 or 2 stocks and try to keep a well-diversified portfolio.
[05:16:40 PM] => Hence,
when the markets start coming down, the fall in MF schemes
is lower compared to % fall in individual stocks. Thus, equity
investment through Mutual Funds reduces the risk profile of
investment to some extent.
[05:18:32 PM] => Raikarpp : When
stock markets are hovering at lower levels, and considering
the current scenario markets are expected to remain dull,
how is your pure equity and balanced equity schemes are expected
[05:19:12 PM] => CD
: In last few months, we have reduced our equity exposure
to a great extent and today we are sitting on 40% cash and
cash equivalent in Equity Fund and almost 35% cash and cash
equivalent in JM Balanced Fund apart from debt exposure of
[05:20:37 PM] => The
equity exposure is also restricted to cash-rich industry leaders
who should be able to survive downturn in their business,
if any. With this defensive positioning we should be able
to minimize losses when the market goes down in the near future
as aftermath of US attack.
[05:21:21 PM] => However,
the cash position built up over last few months will come
handy in next 2-3 months as we plan to accumulate stocks at
lower level. This investment at lower levels should yield
good appreciation over next 9-12 months.
[05:22:23 PM] => Prathu_raikar
: When markets are at lower levels which rationales you hold
good based on which you are expected to give returns above
normal market returns?
[05:23:18 PM] => CD
: Considering the current vulnerable scenario, the Fund has
already reduced its equity exposure as a short term defensive
measure and has decided to reinvest at lower levels when the
[05:23:51 PM] => The
Fund will utilize every major downfall to pick up stocks,
which are relatively insulated and have strong fundamentals.
This cherry picking at attractive valuations should help us
to give above normal market returns.
[05:25:02 PM] => Brijeshved :
How do we know that analyst's in India do not give recommendations
based on their holdings? Merrily Lynch in US has implemented
a policy whereby analyst covering specific sectors and stocks
can not invest in them? Do you have any plans to follow that
[05:26:56 PM] => CD
: In order to ensure that analyst in India do not give recommendations
based on their holdings, SEBI has recently implemented a strict
guideline on ‘Insider Trading’ . As per this guideline, analyst
and Fund Managers etc. are required to give a list of their
(including in the name of spouse) holdings to their organization
which gets forwarded to SEBI.
[05:27:24 PM] => Also
any person giving a media interview cannot recommend a stock
unless he discloses his/her own position in the same. Thus,
these guidelines in a way act as a deterrent to any front-running
or misleading recommendations.
[05:32:11 PM] => Pankajbardiya
: What would be effect from war?
[05:34:03 PM] => CD
: If the current conflict leads to a full-fledged war going
on for a long time, the situation in markets across the world
will worsen. Already, the global economy is on the tip of
recession and war may push it over the edge.
[05:34:30 PM] => No
region (except China) around the globe looks a probable candidate
to take on the mantle of global growth leadership from USA.
Hence, we fear that a prolonged war could lead to recession
around the world.
[05:35:22 PM] => Mahendrakh :
What would be an ideal asset allocation for an investor?
[05:36:17 PM] => CD
: Though asset allocation depends on age and income profile
of the investor depending upon his risk taking ability, on
an average an investor should ideally put 50% of his surplus
money in no-risk investments like tax-free RBI bonds, bank
FDs etc., 30% in low risk bonds and 20% in equity.
[05:37:35 PM] => MariaG : Could
you elaborate on your investment philosophy?
[05:38:28 PM] => CD
: We, at JM Mutual Fund believe that management is the most
critical factor for any company and believe that a good management
can turnaround any business whereas mediocre management can
mar the best business.
[05:39:47 PM] => Hence,
we invest in industry leaders with well-established management.
[05:41:48 PM] => Mohammed Ali
: How has been the performance of your equity funds?
[05:43:24 PM] => CD
: Though equity schemes have been showing negative performance
in last 1 year in line with the industry, JM Balanced is one
of the top performers in its category and we have been able
to beat the industry average in most of our funds.
[05:43:48 PM] => In
fact, JM Basic Fund, our petrochemical sector fund is top
performer in the last 1 month.
[05:48:06 PM] => Myiris : Thats
the end of today's chat with Ms. Chandan Desai, Head - Equity,
JM Mutual Fund.
[05:48:47 PM] => Myiris : We thank
Ms. Desai for making this a lively and informative session.
[05:49:14 PM] => Myiris : Thank
you all for your participation.