Canara Robeco is a JV between Canara Bank, a 100-year old premier bank in India and Robeco, an 80-year old Rabobank entity and an asset management specialist. It is one of the fastest Growing Asset Managers in India, clocking 94% growth year-on-year in AU M (June 2009 over June 2008). It is the Lipper’s Bond Fund House of the Year for 2008 in India. Canara Robeco has an experienced fund management team with over 75 years of experience amongst them in Equities and Fixed Income.Mr. Anand Shah, Head-Equities, Canara Robeco Mutual Fund joined the firm in 2008. He has done his MBA from IIM-Lucknow. Prior to this, he has worked as a Fund Manager with Kotak Mutual Fund for more than 6 years. He also worked as a co Head-Equities with ICICI Prudential Mutual Fund.
Speaking with Yash Ved of India Infoline, Anand Shah says “Liquidity has taken the markets up so far, but we are not comfortable with the valuations right now.”
What is your view on the Indian stock market at this point of time? Where do you see the Sensex by March?
In the short term, we are cautious on the stock market. According to us, the market has factored in a lot of recovery in the economy, domestic & overseas. We don’t see a rosy picture for the global markets next year. The large fiscal stimulus that has supported the markets across the globe will be rolled back partly or completely depending upon the recovery. We see little bit of caution in the markets given the current valuations and fundamentals. Valuations are neither low nor very high. Liquidity has taken the markets up so far, but we are not comfortable with the valuations right now.
What is your view on the Indian economy?
The Indian economy is more resilient than several other global economies. India will continue to grow at a decent rate. India’s FY10 GDP could hit 7%, though we see monsoon affecting the GDP growth rate by 100-150 basis points.
In terms of global markets, whatever green shoots we are talking about is nothing but stabilization of the economic deceleration. The emergency stimulus measures taken by governments around the world will get rolled back next year. As a result, the global economy could actually see another dip in growth compared to this year.
That is where we see an impact on global equity markets which in turn will have some impact on the Indian markets as well.
The global markets have already revived. It is the liquidity that is driving the markets. Otherwise, actually, the markets should be in a correction mode.
What impact do you see from govt borrowing?
The Government has to increase tax revenues and reduce expenditure to keep the bond market stable.
What is your AUM?
Our AUM is Rs84bn. Out of this, around 10% - 12% is equity and rest is debt.
How do you see inflation and interest rates?
We see inflation going up to 6-7% by March 2010, if food inflation deteriorates further.
What is your view on the rupee? What kind of flows do you expect from FIIs?
In the short term, the rupee would depreciate and the dollar will appreciate, and in the long term, the rupee will appreciate vis–a-vis the dollar
India has always been one of the top receivers of global funds and will continue to get money from the foreign investors. There will be bouts of risk aversion which may lead to some outflows. It depends upon fiscal policies pursued by the Government and the status of recovers in the global economy.
Which are the sectors you are bullish and bearish on?
We are bullish on sectors that are linked to the domestic consumption. We are bullish on Telecom, Banking, Power and Pharma and Gas Utilities.
We are bearish on Global Commodities and Metals – sectors that are dependent on global demand.
Any NFO(s) in the near term?
Currently there are some products in pipeline and we would launch our funds as and when we see an opportunity.
What are your plans on the distribution side?
We have done well since 1-2 years of its existence. We have tie ups with most of the banks and also we see huge potential in our Canara Bank distribution.
What is your view on the bond market?
We already have the yield on the benchmark 10-year government bond at around 7.3%. Inflation is also inching up and is likely to be at 6-7% by March. So, our view is that by March, the benchmark 10-year yield could touch the 8% mark.
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