P.V.K Mohan, Head – Equity, Principal Mutual Fund

Mr. P.V.K. Mohan has been appointed as Senior Fund Manager–Equity of Principal Mutual Fund on 21st May, 2010.An Electrical Engineering Graduate from REC, Calicut and a Post Graduate from IIM Bangalore, Mr. Mohan has over 16 years experience in equity research and fund management. In his previous assignments he has worked with IL&FS and IL&FS Mutual Fund, DSP BlackRock Investment Managers and ICICI Prudential Asset Management Company.

Interview

1) What is the likely impact of US downgrading on India? To what extent will the ongoing global crisis hit Indian economy?

The impact of US credit downgrading is more sentimental in the near term as it was not totally unexpected. The world markets have reacted adversely to this event, probably even more so as this would bring under scanner several other economies with large deficits. In case of India, there are concerns on the large centre and state deficits, but much depends upon how Government takes measures and policy reforms in order to address this. Exports which have witnessed strong growth in recent months would probably slow down. Overall, Indian economy is likely to witness a slower growth of around 7.5%, but this would still be healthy relative to the low or no growth in other parts of the world.

2) What is your view on the inflation levels? What are your expectations on RBIs stance of hiking repo rate?

Inflation is quite high at over 9% despite RBI taking steps to tame it. We could see some moderation in inflation in the coming months because of base effect and as the slowdown gathers momentum. We expect another rate hike of around 25 bps by RBI in the September review, but much also depends upon the state of the global economy at that point of time.

3)What are the medium and long term strategies that you adopt in the current market scenario? Could you throw some light on the structure of your research team?

We have a team of four analysts who are sector specialists. Our approach is focused on fundamentals, wherein we look for sectors and within that, companies with good growth prospects over the next 2-3 years. Generally we prefer companies with a dominant presence within their sectors, with proven management, financial stability and available at attractive valuations relative to their peers, the market and in relation to their growth prospects.

4) For equity schemes, what are kind of risk management measures in place at the AMC?

We have defined limits for sector and stock exposure compared to that in the benchmark index. We do however invest in several companies outside the benchmark index. This ensures a more balanced portfolio construction.

5)Which sectors you are bullish on?

Some of the sectors we like include Energy, Telecom, Financials (post recent correction), Consumer, Pharmaceuticals. We also see some good bottom up opportunities in Auto & Auto Ancillaries, Industrials.

6) What will be your advice to retail investors in the present scenario?

An investor can enter the market at the current levels with a view of 12 months or more to fetch better results. There may be some volatility and corrections in the near term, but the risk-reward seems favourable at this juncture.

Source: http://www.mutualfundsindia.com/fm_pvk.asp