Rajan Krishnan, CEO, Baroda Pioneer AMC Limited

Rajan Krishnan, CEO, Baroda Pioneer AMC Limited, is a B.A (Hons) from Delhi University and a PGDBM from XLRI, Jamshedpur having over 23 years of experience in marketing, of which 14 years are in the mutual fund industry. Mr Krishnan was appointed Chief Executive Officer of Baroda Pioneer Asset Management Co. Ltd. in July 2008. Prior to his appointment, he was the Business Head (Asset Management) – Principal Pnb Asset Management Company Pvt Ltd from June 2003 to March 2008, Vice President ( Sales and Marketing) - Zurich Asset Management Company Pvt. Ltd between Dec 1999 to June 2003 and Vice President (Sales) – Kothari Pioneer Asset Management Company Limited from September 1994 to December 1999

Baroda Pioneer Asset Management Company Limited is a joint venture between Bank of Baroda and Pioneer Investments S.p.A. Since the formation of the joint venture in 2008, Baroda Pioneer has worked relentlessly to create an investment platform suited to the requirements of Mutual Fund investors in India. Baroda Pioneer offers a range of equity, debt and money market offerings. Its average assets under management (AAuM) stand at Rs.3,547 Cr. (as on 31 March’10) and operates out of 17 locations in India.

Replying to Yash Ved of IIFL, "At current valuations, the Indian markets are enjoying a premium in-line with historical averages and thus are not very expensive."

What is your view on the Indian stock market?

The Indian stock market has performed very well given the turbulence seen globally due to multiple issues like sovereign debt risk in Europe, fragile recovery in US and in other developed countries and a slow down in China.

As far as India is concerned, fundamentals have clearly improved. On the macro front, positives like 3G auction windfall, PSU disinvestments, proposed deregulation of oil prices etc should help in keeping the fiscal deficit under control. As of now, it seems that we would have a normal monsoon. This should help in bringing down food prices as compared to last year.

India historically has traded at a premium as compared to other emerging markets because of its ability to sustain high growth rates on the back of its demographics, high saving rate and lower linkages to global growth. At current valuations, the Indian markets are enjoying a premium in-line with historical averages and thus are not very expensive.

Going forward, given the growth and profitability prospects, the Indian markets would continue to enjoy this premium.

What is your view on the rupee?

Fear of a global crisis is not the only factor driving the sentiment in the currency markets. Global growth is just as critical. The US is considered as a proxy to the world economy and hence any slowdown there is considered as slowdown in the world economy. Lower than expected GDP numbers in the US can lower the dollar’s strength when measured against its peers.

At present, the rupee remains on the backfoot following rising trade deficit and slower pace of capital inflows even though the inflows from FIIs remain healthy. At this stage, sustained weakness of the greenback and low capital inflows do not support the case for a strong rupee. In the short term, the rupee may continue to trade with a weakening bias in the 46-47.50 range.

What is your outlook on the Indian economy?

India’s growth projection is likely to be upgraded to 8.5% from an earlier forecast of 8.25%. Rainfalls have been largely in-line with pre-monsoon predictions. Given this scenario, the farm sector is most likely to grow at a rate above 4%. The Government could improve its fiscal deficit from its budgeted 5.5% of the GDP in 2010-11 by following a path of better fiscal management.

Which are the sectors you are bullish and bearish on?

In the current market conditions, we are positive on defensive sectors like Pharmaceuticals, which in recent times have seen many an M&As in the generic space. We are also positive on Consumer Discretionary sectors like Automobiles.

We like Infrastructure and Industrial stocks because of the additional order flows expected in the coming years. Continued thrust on Infrastructure by the Government and increased participation of private players bodes well for companies in this space.

We also like PSUs Banks. In the near term, a higher credit off-take from industries and the retail segment would benefit the banking sector. We are underweight on Real Estate, Telecommunications, Consumer Staples and Materials - Cement.

What kind of cash levels you are sitting on?

We do not hold too much cash in our portfolio. Our cash exposure currently is about 3-4%.

What is your advice to retail investors?

Given India’s growth story, equity investments would continue to offer good returns. I would advise retail investors to invest in equities through the SIP route, as it is a time-tested strategy. Investors should also follow the concept of asset allocation to build up on their diversified portfolio.

Source: http://www.indiainfoline.com/Research/LeaderSpeak/Rajan-Krishnan-CEO-Baroda-Pioneer-AMC-Limited/20266862