Kaushik Dani, Head of Equity, Peerless Funds Management Company has over 16 years of experience in Fund Management, Investments and related areas. The previous experience includes Equity Fund Manager and PMS Head, K. R. Choksey Shares& Securities Pvt. Ltd.; Manager – Investments, Birla Sunlife AMC; Assoc. Vice President – PMS, Sharekhan Ltd.; Senior Research Executive, SG Asia Securities (India) Pvt. Ltd.; Manager – Research Data, Motilal Oswal Securities Ltd.
Peerless Mutual Fund is the first mutual fund in the eastern region, headquartered in Kolkata. It is constituted as a trust with The Peerless General Finance and Investment Company Limited (PGFI) as the Sponsor and Peerless Trust Management Company Ltd. as the Trustee to the Mutual Fund. Peerless Funds Management Company Ltd., is the Investment Manager of the Fund and is one of the fastest growing AMCs in India aims to create solutions for the ‘retail’ customer and for the entire investing universe. The company has created its own presence in 34 locations to start with focus on Tier II and Tier III locations.
Replying to Yash Ved of IIFL, Kaushik Dani says, “For the year 2012, we expect the Sensex to end with single digit returns.”
Where do you see the Sensex by December 2012?
Markets gave negative returns during the calendar year 2011, with the large cap indices losing close to 25%. Year 2012 has started on a lower base and that has helped the overall markets to float positive, year to date.
Global problems are very much in play due to the Eurozone debt crisis and slowing economic growth elsewhere in the world. This, coupled with deteriorating domestic macro-economic factors would keep the markets under pressure in the near term.
We believe that by next year, the Indian markets would be in a better position, with all above events hopefully behind us. For the year 2012, we expect the Sensex to end with single digit returns.
What is your outlook on Indian and global economy?
There is still lot of uncertainty about the fate of austerity measures undertaken by debt-heavy eurozone countries like Greece. The European sovereign debt crisis is far from over and thus risk aversion is still very much in vogue. This would suppress incremental FII flows for the emerging economies, including India. Slowing global growth is another concern which impacts trade and overall growth.
Domestic macros have been plagued by high interest rates, sticky inflation and low investment environment. Rising input costs have further fuelled the problems. Lack of progress on policy reforms and high interest rates have led to lower investments from Indian companies.
Industrial growth for FY12 has been a meager 2.8%. Inability to improve the fiscal imbalance has added to the woes. Worsening trade deficit and lower foreign capital inflows is also putting pressure on the domestic currency. So, the picture looks grim in the near term.
However, all this is behind us. A favorable base and removal of supply-side constraints would lead to lower inflation going forward. It is expected that reforms would be given some boost as well, which would lead to revival of investments and spending - thereby promoting future growth. So, the near term outlook might be looking gloomy but for the long term one can be reasonably positive.
Which are the sectors you are bullish or bearish on?
India, unlike many other emerging economies, is not commodity driven or dependant on foreign growth. Huge middle-income population, increasing disposable income and fast-changing spending habits point to a strong domestic consumption over long run.
For future growth and servicing, a nation like India requires big infrastructure push and other investments in the coming years. Thus, consumption and investments are the two themes where we are bullish on.
With some signs of reversal in the rate-hike cycle, we like rate sensitives sectors also. We also like select stocks among Auto, Healthcare and Technology space.
We believe that global slowdown would impact Commodities and would avoid sectors related to Energy and Metals.
What is your GDP growth forecast for FY13?
India’s GDP growth is expected to remain subdued for the next few quarters. Growth for FY12 has been below 7%. Stubborn inflation, high interest rates and fiscal imbalances are weighing on the Indian economic growth. We expect GDP growth for FY13 to be around 7%.
What is your outlook on gold?
Gold had a significant rally last year, with international prices touching $1900. That rally seemed unsustainable and thus gold prices rightly corrected after that. Currently, gold trades close to $1550 and the froth is now gone.
In recent times, the yellow metal is in demand because of buying by various central banks and due to genuine retail consumption. Global woes have led to risk-aversion and this has also boosted gold prices.
Gold continues to look stable and we expect it to generate decent returns from a long term point of view. Domestic gold prices have currency as an additional variable and a weak rupee will also strengthen local gold prices.
What is your outlook on the rupee?
Indian Rupee has recently hit all time low, touching 56 levels. Strengthening of the US dollar, worsening trade deficit and poor FII inflows are contributing to the same. Rupee in the near term is expected to be in the band of +/- 5%. Material change in macro fundamentals is needed to strengthen the rupee in the long run.
Do you expect rate cut in the coming months? Where do you see inflation and interest rates?
We have already started witnessing a reversal of rate-hikes by the RBI; with the 50bps cut in repo rate in April. Liquidity issues led to a CRR cut in March. Softening inflation and lower growth led to these actions by the central bank.
However, inflation still remains sticky around 7% and till the time we see a meaningful correction in inflation, rate cuts would not be easy. Interest rates are expected to move in tandem with the movement of core inflation going forward.
What is your advice to retail investors?
Sticky inflation, volatile commodity prices and lower GDP growth have adversely impacted the overall market sentiment. Apart from domestic issues, we are also facing global uncertainties which have kept incremental FII inflows low.
Market valuations have now become reasonable but are still far away from historic lows. Inspite of reasonable valuations, doubts remain over the extent of earnings growth.
Keeping the above points in mind, long term growth story of India remains strong. Thus, it is important for retail investors to invest regularly and systematically over a longer period of time. Systematic investments (SIP) over a longer time horizon (at least 3-5 years) would be a preferred way of participating in the markets.
What is your current AUM?
Our Assets Under Management (AUM) stood at Rs 38.10bn as on 30th March, 2012.
Brief us about your equity schemes?
Among the equity related schemes; we have one pure equity scheme called Peerless Equity Fund. It is a multi-cap diversified fund benchmarked against the S&P CNX Nifty.
We also have two hybrid schemes; Peerless Income Plus Fund, a conservative MIP having investments in Debt and Equity, and Peerless MF Child Plan, which along with Debt and Equities, also invests in Gold ETFs.