PM] => Welcome
to the live chat session : Mr Rajat Jain will be joining shortly
[04:32:24 PM] => DISCLAIMER
[04:32:52 PM] => Mr.
Rajat Jain is the CIO of IDBI PRINCIPAL AMC. These are his
personal views and not necessarily those of IDBI PRINCIPAL
AMC Ltd. At the time of this conversation/chat, the Fund House
may or may not have positions in the stocks mentioned below
, although holdings may change at any time.
[04:33:37 PM] => The
views expressed by Mr. Rajat Jain 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. IDBI PRINCIPAL AMC Ltd. from time to time, may buy
or sell in the securities, or derivatives thereof, of companies
mentioned herein and may take positions inconsistent with
the views expressed. 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.
[04:33:59 PM] => Lastly
the views expressed by Mr. Jain 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.
[04:37:51 PM] => Welcome
to the chat session Mr Rajat Jain
[04:38:18 PM] => Rgoswami:
Should the investor move ONLY to debt funds looking at the
volatility in the equity-markets?
[04:38:39 PM] => RJ:
The debt and equity funds meet different needs and cater to
different risk profiles. An investor, depending on where he
is in the life cycle , should have a varying mix of the two
in his portfolio. If u are looking at being invested over
the longer term, you should have some equity component in
[04:39:31 PM] => Haresh:
You seem to have missed the bus in Income / Debt Funds. Were
you too conservative or have the calls gone wrong. Secondly
are their too may NPA\'s which have forced you to mark to
market such securities?
[04:40:14 PM] => RJ:
Our calls in income funds have generally been right and we
have used opportunities to alter our investment profile based
on market developments. The fund has no NPAs and most (90%+)
of our investments are in assets rated AA+ and above.
[04:40:57 PM] => Aagrawal:
Is there a correlation between the size of a fund and its
[04:41:50 PM] => RJ:
Volatility of the fund would depend on the composition and
the construction of the fund.
[04:42:33 PM] => Rajeshri
: Your Equity funds seemed to have withstood the downtrend
seen in our equity markets. What’s the reason behind your
success. Is it sitting on Cash / Debt
[04:42:56 PM] => RJ:
Diversification of the portfolio with risk control measures
helped us. The fund has no debt component.
[04:43:52 PM] => Maheshshah:
What will be the impact of options to mutual funds?
[04:44:29 PM] => RJ:
It could give us a route to hedge our portfolio, but right
now it is early to say as we are awaiting guidelines to come
[04:45:22 PM] => Vedansh2000:
What level of P/E multiple band would you give FMCG Companies
say between multiples of 25-30 or 20-25, considering that
competition is increasing and imports are easier
[04:45:54 PM] => PE
multiples are a function of growth in free cash flows and
the prevailing interest rates. Growth in free cash flows depends
on companies and in case because of any factor the long term
growth rates have come down then the PE should fall. On the
other hand interest rates in India have gone down by around
25% (300 basis points) which itself will cause the PE to go
[04:46:28 PM] => Rohita:
What are futures and options? How do they work? What is the
effect on the stock markets and mutual funds?
[04:46:57 PM] => RJ:
Futures and options are instruments where the underlying assets
is the stock ... one get more information from any reputed
[04:47:26 PM] => Vedansh2000:
what are your long-term views on Colgate say three years -
considering that toothpaste market is not expanding and very
competitive (HLL in particular)
[04:48:00 PM] => RJ:
No comments on individual stocks.
[04:48:48 PM] => Preethi:
I have been reading a few transcripts of the fund managers
on myiris and I am surprised to see everybody having a bullish
view. If everyone seems bullish why are you all sitting on
cash. Secondly all domestic MF\'s have been selling in the
last three months. Is all this talk just a sham?
[04:49:12 PM] => RJ:
Speaking for ourselves we do not have very high cash levels.
[04:50:19 PM] => Vishalgupta:
A company announces that it is splitting its shares of 10/-
each into 10 shares of 1/- each, but the company is trading
at 4.85/- currently does this splitting is in my favour or
[04:50:49 PM] => RJ:
Splitting theoretically has no effect on stock price except
that it increases volumes being traded in the stock. This
can enhance interest in the stock.
[04:51:19 PM] => Mmittalajit:
What do you suggest for US 64 of UTI
[04:51:33 PM] => RJ:
[04:52:01 PM] => Rashesh:
Are we witnessing a bear market rally?
[04:52:30 PM] => RJ:
We invest when we see stocks trading at attractive prices.
I think rather than debating what the market movement is we
concentrate on stocks and their prices.
[04:52:52 PM] => Vshah:
What are MFs net sellers over the last few months?
[04:53:07 PM] => RJ:
Already replied to.
[04:53:56 PM] => Gauri:
Do you believe that MF’s to had a role to play in this latest
market fall? Should SEBI investigate the role of MF’s?
[04:54:32 PM] => RJ:
MF's as an investor class have to adhere to stringent guidelines.
We at IDBI Principal have strict risk controls complying with
our internal Board guidelines as well as SEBI guidelines.
As far as investigations are concerned it is for the JPC to
[04:54:55 PM] => Biks:
What OPTIONS does the FUTURE hold for MF's?
[04:55:20 PM] => RJ:
Mutual Funds are going to be a predominant option for investors
as they meet the needs the investors have.
[04:55:49 PM] => Shashik:
Which sectors are you bullish on? Do you think the tech sector
is still buyable?
[04:56:25 PM] => RJ:
FMCG, Oil and IT are the top sectors in our portfolio. As
far as IT is concerned one should stick to large companies
with attractive valuations.
[04:56:53 PM] => Rakeshm:
What is the difference between your growth and equity schemes?
[04:57:23 PM] => RJ:
The equity fund has a maximum of 85% that can be invested
in equity, while the growth fund can not invest in debt.
[04:57:48 PM] => Sunita_rao:
How has the association of IDBI with Principal helped? When
do you think pension schemes will happen in India?
[04:58:19 PM] => RJ:
It has helped in terms of technology, design and launch of
new products and improving customer servicing. Insurance Regulatory
and Development Authority (IRDA) is working on the launch
of pension funds in the private sector and we hope they will
[04:59:19 PM] => Sharmash:
Your growth fund is highly concentrated on Fmcg and oil? What
is the reason?
[04:59:52 PM] => RJ:
We think these sectors will outperform the index because they
are attractively valued. The FMCG companies, which we have
in our portfolio are cheap and are showing good growth. The
oil companies have stable earnings, are cheap and have the
[05:00:19 PM] => Vicksm:
Your fundhouse does not seem to be bullish on telecom and
pharma as you have invested only about 2-3% of your assets
in them. Is there any reason for the same?
[05:00:53 PM] => RJ:
We have more than 7% of the portfolio in pharmaceuticals,
which we think is appropriate given the current valuations
in the sector. The fast changing dynamics of the sector make
us stay away from the sector.
[05:01:14 PM] => Chitna:
Why have you chosen not to invest in Wipro? is it not a good
scrip any more.
[05:01:24 PM] => RJ:
No comments on individual stocks.
[05:01:43 PM] => Vishalj:
Your index fund has outperformed the index. What do you think
are the reasons for the same?
[05:02:34 PM] => RJ:
The benchmark for an index fund is the Total Return (TR) index
which takes into account the dividends paid by the companies.
Our fund has performed in line with the TR index with an annualized
tracking error of 0.72%.
[05:03:43 PM] => Valabh:
Is the YUAN (China's currency) expected to devalue since China
is also facing a slowdown? What is the likely impact on our
economy if it does happen?
[05:04:10 PM] => RJ:
Indian exports and Chinese exports don't have a major overlap
and as such a weakening of the Chinese currency should not
adversely impact our exports.
[05:04:27 PM] => Jajoo:
Do you think that the MF industry in India is very unprofessional
and lack foresight?
[05:05:41 PM] => RJ:
Mutual Funds are governed by a board of directors and a board
of trustees. We have internal audit as well as external audit
and are also under SEBI audit. Last year was a year where
Mutual Funds have not performed well, but so is the case in
any other country too. Mutual Funds as a class were bullish
on the TMT sector which underperformed last year. I do not
think that this should lead one to pass hasty judgments on
[05:09:26 PM] => Myiris:
Hold on friends, Rajat is on a important call
[05:13:07 PM] => Kevalam:
Is there a need for a mid-path in MF classification ? Why
can't we have Equity and debt and its numerous variations
rather than having Equity Debt and Balanced Funds- is Balanced
fund a necessity ??
[05:14:27 PM] => RJ:
The financial planning industry in India is not advanced enough
to enable the investor to make such allocation decisions.
We along with leading distributors are sponsoring a program
for Certified Financial Planners (CFA) which would be able
to give investors good investment advice.
[05:14:57 PM] => Mcdmpl
: When will sensex cross 4500 mark ?
[05:15:35 PM] => RJ:
We do not take views on market. We stick to buying good quality
stocks at attractive prices.
[05:16:08 PM] => jjagtiani
: Its very nice to introduce options into our markets but
the underlying question is that HOW WOULD YOU PRICE AN OPTION
given that the underlying statistics for pricing will have
[05:17:21 PM] => RJ:
I do not understand the question because for pricing of an
option you need the underlying volatility of the historical
stock price which is available for all the stocks. Other factors
such as strike price, exercise price, time to maturity and
risk free rate of interest is known.
[05:17:50 PM] => Dannysi:
do you think the govt. is doing the right time by bailing
out UTI & US 64?
[05:18:12 PM] => RJ:
[05:18:35 PM] => rajat_shri:
How do MFs value unlisted securities?
[05:19:56 PM] => RJ:
As of now the Trustees of the fund approve the valuation guidelines
for unlisted equities. We do not hold any unlisted securities
in our portfolio.
[05:20:21 PM] => villaspr02:
What do you think of telecom and media sectors?
[05:21:12 PM] => RJ:
Telecom sector : We are not very comfortable investing in
this sector because of rapidly changing dynamics.
[05:21:33 PM] => Media
Sector : We think the risk reward ratio of investing in this
sector is not very much in favour of the investor.
[05:21:54 PM] => Ashishgupta:
What is the role of AMFI?
[05:22:33 PM] => RJ:
AMFI is the apex body of Mutual Funds which acts as a Self
Regulatory Organisation for the industry and is the spokesman
of the industry.
[05:23:23 PM] => Devang:
Do Fund Managers put their own money where they put in Investors
or do they ensure that they do not invest and get a kick out
of gambling other people's money away
[05:23:57 PM] => RJ:
Fund managers and other Key Personnel can invest in their
own funds. Any equity investment has to be reported to the
Compliance officer of the Fund.
[05:24:40 PM] => rksingh64:
do you agree with premjis claim of wipro to be $5bn co. by
[05:25:01 PM] => RJ:
No comments on individual stocks
[05:25:19 PM] => challan65:
Do you think the FM salary should be linked to funds performance?
have performed dismally but I haven't heard of any FM being
sacked or even criticized? This is not the way other COs function.
05:26:00 PM] =>
The overall compensation packet of the fund manager consists
of a fixed component and a variable component. The variable
component depends on the performance of the fund. The performance
of a fund manager should be judged over a length of time.
Judging the performance over a short time period would not
be correct. A fund manager who performs poorly consistently
would have a tough time.
[05:26:28 PM] => janusha:
Can you please explain how your debt schemes are different?
What is cash mgmt. fund? Can I invest in it?
[05:27:13 PM] => RJ:
Our debt funds have been a consistent performer. Cash management
fund is aimed at providing returns for short term surpluses
they have. You can invest in it, the minimum amount is Rs
10000 for the Liquid option.
[05:27:32 PM] => madmax_me:
How will scrapping badla help?
[05:28:35 PM] => RJ:
It will help in separating the speculative market from the
cash market. Speculative volumes will happen in the derivatives
[05:28:48 PM] => novice:
how does one choose a MF?
[05:30:44 PM] => RJ:
One should look for the following qualities
[05:30:58 PM] => a)
the fund's philosophy and your investment needs should match
[05:31:08 PM] => b)
Consistency and disciplined way of investing
[05:31:16 PM] => c)
[05:31:26 PM] => d)
[05:34:21 PM] => pranav:
Should YASHWANT SINHA do a MANMOHAN - Increase Public Expenditure
and have a higher interest rate/ inflation regime for atleast
a year so as to kickstart the economy ?
[05:35:24 PM] => RJ:
I think the government should form clear policy guidelines
for investment (Local as well as FDI) so that the private
sector comes in. As regards government spending it is more
important that the money is efficiently spent and the projects
[05:35:53 PM] => hunozc
: Your view on interest rates ? Can our Economy afford lower
interest rates ?
[05:36:30 PM] => RJ:
We expect stable to soft interest rates. We do need lower
interest rates because of the positive impact on Fiscal deficit
as well as lowering the cost of capital for the Indian corporates.
[05:36:46 PM] => ghanshyamk:
Are we headed towards a recession ?
[05:37:09 PM] => There
would be normal business cycles in any economy. Longer term
India should be able to grow at 6-7% GDP growth rate.
[05:37:32 PM] => rance:
Are No circuit Filters for stocks going to increase volatility
- IF yes then why the introduction , and if no why do you
think that it was not introduced earlier - IS SEBI SLEEPING?
[05:38:19 PM] => RJ:
There will be circuit filters on the broader index movement,
which is in line with other developed countries. Once the
cash market is only for delivery and not for speculative trades
it does not matter as ultimately the investor is either willing
to buy or sell at the high or the low prices
[05:38:47 PM] => jkrishanan:
KP is finally out of Jail ON BAIL- Now will we see an uptrend-
will all you MF's work with him to bring some sanity into
these markets - YOU ALL HAVE WORKED WITH HIM IN THE PAST!
[05:39:38 PM] => RJ:
The markets will move on fundamentals. Shorter term it can
have swings not in line with the fundamentals but ultimately
the prices will reflect the fundamentals of the company. We
invest in stocks based on fundamentals of the underlying companies.
[05:40:21 PM] => Milinddavane:
Where do you see the capital markets going in the coming six
months to 1 year and what would you suggest to an investor
who wants to invest in equities at this stage of time. What
would you suggest to an investor who wants to invest in a
mutual fund under the IT sector at this stage of time.
[05:41:26 PM] => RJ:
We invest in companies based on their fundamentals at a stock
price which we are comfortable with. Companies with good fundamentals
perform in the longer run irrespective of broader market movements.
I do wish one could predict what happens in the next 6 months
or 1 year. But if you do want to invest in equities you should
have a longer time horizon. One way to invest in stock markets
is Systematic Investment Plan (SIP) where in you invest at
periodical intervals (month, quarter, etc.) so that you do
not get adversely affected by unusual volatility.
[05:41:54 PM] => Taking
exposure to any one sector whether IT or any other is more
risky because there is no diversification available outside
the sector. If you are willing to accept this risk and you
find the sector very good you could invest in such a fund.
[05:42:13 PM] => Cr_shah:
Sir, what u feel is the new emerging industry and why? Do
u feel that the new mania of BUYBACK by the MNCs will continue?
[05:43:28 PM] => RJ:
As of now I do not see a new emerging sector coming up. Buybacks
are done when the company feels its share price is undervalued.
Because of liberalization of the economy some MNC’s do find
their share price undervalued and it gives them a good opportunity
to buy back their shares. But one can not with any large certainty
predict such buybacks.
[05:43:57 PM] => Cr_shah:
What is the outlook on Indian market post elimination of Badla
[05:44:37 PM] => RJ:
Markets reflect fundamentals in the long term. Badla elimination
may cause short term movements but in the longer run nothing
other than the fundamentals drive the stock price.
[05:45:04 PM] => Cr_shah_in:
What is your view if the chinese currency is devalued on the
India's economy and also on the market
[05:45:21 PM] => RJ:
Already replied to
[05:48:07 PM] => Myiris:
Mr Rajat will be taking the last few questions
[05:49:01 PM] => Sunil
Singhania: IDBI Mf has an Index fund, yet they have been not
active in Index Futures.Why? How can you be so sure of participating
[05:49:38 PM] => RJ:
Volumes in Index futures are not very high as of now but we
would like to use index futures as and when we feel it can
aid in better management of our fund. As far as options are
concerned we would participate in it if and only if they add
value to our present investment process.
[05:50:12 PM] => M
Priya: Why are MFs selling for the last few months when FIIs
are buying? Who's the bigger fool?
[05:50:39 PM] => RJ:
We have not been net sellers in the market in the last few
[05:51:10 PM] => Mehra
P: Will Morgan Stanley revamping it's index hit India adversely?
[05:51:55 PM] => RJ:
It looks to be so right now … there would be some rebalancing
of portfolios of funds benchmarked to these indexes. However
the net effect is going to be spread out over time. But as
mentioned earlier apart from short term movements the markets
in general move in line with fundamentals.
[05:53:02 PM] => Bharat
shah: How is your scheme doing?
[05:53:52 PM] => RJ:
We have been performing consistently in line with our stated
objectives. We have 23 schemes under management. It would
be difficult to give an answer to your question without knowing
which scheme you are referring to. You can get performance
data from www.myiris.com
[05:54:17 PM] => Sureshsur:
Hello just now I joined the chat? Are you bullish about the
medium term and long term about the market?
[05:54:57 PM] => RJ:
As mentioned earlier we look at stocks which are underpriced
compared to their fundamentals. We believe that such undervalued
stocks perform irrespective of market movements over long
term. Sure a bullish market helps in realizing our objectives
[05:55:36 PM] => Neeraj:
Wouldn’t it have been better if Sebi had allowed phased Withdrawal
[05:55:53 PM] => RJ:
Already replied to.
[05:56:15 PM] => Ashok:
How do you see the long-term prospects of the Indian software
industry? Is china a big threat?
[05:56:45 PM] => RJ:
Right now Indian companies have got English Language competency
as a big advantage to themselves. We have developed enormous
expertise in servicing various types of industry verticals
and on different technology platforms. As a service industry
I think relationships matter a lot and companies which are
able to establish a good relationship offering good value
to customers should be able to survive China competition.
[05:56:59 PM] => Bharat:
How about investing in Media sector?
[05:57:17 PM] => Already
[05:58:22 PM] => Sameer
: What do you mean when one says that the short sales are
banned. Suppose I sell 50 shares on Wednesday then can I buy
[05:58:41 PM] => RJ:
No you Cannnot do such a transaction.
[06:00:11 PM] => Myiris:
Thank you Mr Rajat for a lively and informative session
[06:01:33 PM] => RJ:
Thank you all, and Thank you Myiris for conducting this chat
session It has been a pleasure
[06:04:18 PM] => Myiris:
Thank you friends and don't forget to join us for the next
chat session with Mr Nimish Shah, CEO, PPFAS on Friday May