Mr. Nilesh Shetty

Excerpts:

1) What will the key driving factors for markets going ahead? How are your funds positioned in the current market conditions?

Demonitisation has stalled the uptick in consumption cycle. Private Capex remains weak. Revival of both will be keen watched. Corporate earnings have remained weak for the last three years we remain slightly cautious of the near-term macro and believe there could be downside risks to GDP estimate. The fund strategy remains stock specific and we continue to focus on the managements building the businesses for the long term.

2) What are your expectations from Union Budget 2017-18?

Consumer discretionary spend had collapsed post Demonitisation and still remains below normal. One can expect some announcements to kick start the consumption cycle including possible rejig in tax slabs or increase in deductions to leave more purchasing power with the tax payers. Rural India was particularly badly hit after Demonitisation and one can expect some measures specifically targeted to address rural discontent. Relaxation of FRBM norms is likely to kick start the consumption cycle.

A series of important state elections are scheduled after the budget. There is a risk that the Government may resort to populist policies to garner votes. Any significant populist tilt with weak economic basis may not be perceived favorably. In addition, one of the commitments of the BJP government pre-polls has been to simplify the tax structure as well as administration. However very little has been seen so far. One hopes some movement towards simplifying the tax structure is observed. Timelines for Implementation of GST will be keenly watched

3) Has the change in government proved beneficial to economy so far? How?

There is very little evidence of corruption at the top level which is the biggest positive of this government which remains the biggest positive of this government. There has been some evidence of simplification of laws but by and large a lot needs to be done

4) How do you perceive the government's demonetization move? What are negative and positive implications?

Demonitisation has been a very poorly conceived and executed plan. Looking at the economic costs involved with loss of productivity, lower revenues, loss of taxes, and stalling of the consumption cycle, the payoffs could never justify whatever the government was trying to achieve in terms of targeting black money. One may see some reversal of underreporting by the informal sector but by and large the negatives still far outweigh the positives.

5) What are the essential traits for the stocks to be in your portfolio?

We follow a value style of investing. Our strategy remains to buy good stocks at reasonable valuations to generate sustainable long term returns. We are purely bottom up stock pickers and just focus on long term fundamentals while trying to value companies. We have a predetermined Buy and Sell limit for each stock actively covered by our research team. The limits are decided based on sustainable cash flow generating ability of a company and its long term valuation bands. Once a stock hits our buy limit it finds its way into our portfolio and once it hits our sell limit it exits our portfolio.

6) How are the market positioned to face global clues? Share your views on global economies and their impact on India?

Global events like Brexit and Trump Winning the US elections are indicators that we may over the next few years see a world which is a lot more insular and protectionist in policymaking. One may also see economic costs being imposed on businesses which thrive on the free movement of goods and labour. Fortunately for India it still remains a domestic story driven by the Indian consumer. India should be one of the least impacted countries if there are significant barriers imposed on global trade.

7) Is India still an attractive investment destination?

India remains a long term structural story. We have some great companies run by excellent managements who are building businesses for the long term. Near term there might be some issues with weak corporate performance but we believe over the next five years there could be decent upside from current levels. We believe Indian equities as an asset class will continue to draw long term patient capital from abroad.

8) Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

We have a stock specific strategy and are sector agnostic. Currently consumer discretionary led by two wheelers have larger weight in the portfolio followed by power and gas utilities purely due to attractive valuations. We do not have any allocation to consumer staples purely due to expensive valuations. Companies with weak corporate governance and a history of treating minority shareholders poorly do not come into our portfolio.

9) How often do you re-balance your equity allocation?

We are never in a hurry to re-balance or keep changing our portfolio. Our strategy is to buy good companies at comfortable valuations and wait patiently for value to emerge. We sell only when the stock becomes expensive and hits our sell limit. Ignoring market froth has allowed us to generate steady returns over the long term. We don't mind holding on a company for long time. The best investors have held good companies over decades to generate superior returns.

10) Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

We are a boring long only value fund. We tend to have very low churn. We focus on individual companies and any stock if its hits our Buy limit will be part of the portfolio irrespective of market levels. Similarly, we exit companies if they hit our sell limit irrespective of market levels. We do take any view on markets and avoid making portfolio changes based on the same.

11) What would you like to advice to the investors in the current scenario? What strategy would you suggest the investor to adopt at this point of time in the market?

Near term there could be some turbulence related to rising inflation and weak corporate performance. However, India is a long term structural story, hence any significant correction should be used a great buying opportunity. Timing the market is tough hence a sustained allocation to equities via SIP is best advised.

Mr. Puneet Pal

Excerpts:

1.What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?

Yields in India have come down by 50-60 basis points across the curve over the last one month. Since the beginning of this year yields have come down by 150 basis points. We expect the 10-year bond yield to come down further to 6.00% by March 2017, the fall in yields is reflecting the fall in Inflation and we expect Inflation to undershoot RBI's March 2017 target of 5.00%.

The demonization of high denomination currency announced by the Government will lead to further fall in Inflation and the recent drop in yields is reflecting those expectations. We expect 50 bps rate cut by March 2017. The key driving factor for yields would be lower Inflation and the favorable demand supply dynamics post demonetization as demand for gilts will increase structurally over the medium term due to increase in Bank deposits. We expect a net addition of INR 2-3 trn in bank deposits over the medium term because of demonetization. 

2. How do you perceive the government's demonetization move? What are negative and positive implications?

Demonetization is a bold move by the government. We believe that along with Demonetization other follow through measures will be needed and more administrative steps will be required to reinforce the strong message which demonetization has delivered.

Demonetization, if followed through by other administrative steps, will lead to a wider Tax base in the economy and will structurally improve the Tax / GDP ratio in the economy. Apart from that it will also lead to increase in share of financial savings over a period and will be beneficial for the Financial Services Industry the Asset Management Industry. There will be major positives over the medium term though short term adjustment can be stressful.

3.What is your strategy for short term funds? What is your exposure to long term funds and why?

In our short term, Income Funds, we are keeping the portfolio average maturity close to 3yrs as we believe that from a risk adjusted basis the 3yr point on the curve looks better. Our portfolio has a combination of money market instruments and short term debt instruments and we manage the portfolio in a conservative manner. Our investment philosophy is all about delivering a superior risk adjusted return. We are conservative in taking credits in our portfolio's and only invest in securities whose rating is AA- and above.  

4.Kindly share your views on recent inflation movement? Where will the inflation curve move in near term? Why?

The CPI Inflation for October came in at 4.20%, going ahead we expect Inflation to remain low as normal monsoons have lowered food prices and the immediate impact of demonetization will be lower Inflation and growth, which can continue for the next 2-3 quarters. We expect inflation to undershoot RBI's target of 5% by March 2017. Over the next one year we expect Inflation to remain below 5% and average around 4.5% over the course of the next one year, primarily because lower food prices and demonetization.

5.What's your investment strategy?

Our Investment Philosophy is to deliver superior risk adjusted returns to the Investor. This is the guiding principal across our portfolio's. The strategy for individual portfolio's will depend upon the positioning of respective funds. In some of our funds we may take tactical calls and in other funds we may take a more longer term view.

Our Investment strategy for individual funds starts from the asset allocation decision depending upon the product's positioning along with the regulatory requirements concerning the fund. Our outlook on Interest rates will determine the kind of duration that we will run in our portfolio's and the relative valuation of the different maturity buckets will determine the position on the yield curve. Likewise, the outlook on the credit scenario will determine our exposure to various sectors. Our overall credit policy is conservative and we do not take exposure to securities whose rating is below AA-. 

6.How often do you re-balance your debt allocation?

In the normal course, we review our portfoliosmonthly though we may or may not rebalance the portfolio at the time of review. The need to rebalance our portfolio's will arise when there is a change in our outlook and that will depend upon the evolving market scenario. We keep a regular tab on both domestic and global macroeconomic variables and how they are likely to impact the markets.

7.If the interest rates fall further what will be your strategy for debt funds?

We do expect policy rate to fall by another 50-bps going factor and as such as per the given positioning of various individual funds, we are maintaining a long duration bias in our funds.

8.What is your advice to the investors?

Currently from a risk reward perspective we would advise Investors to invest in Short term Income Funds considering the fact that Interest rates and yields have fallen by 175 basis points over the last two years and though we expect further reduction in policy rates to the tune of 50-70 bps points , we advise the investors to be overweight on the short term income funds considering that fact that they will be investing for a period of 3yrs. Those investors with a shorter term and tactical view can invest in gilt funds or dynamic bond funds. 

9. Has the inflation started to fall again? What will be the RBI's move in coming policy amidst global and domestic events?

Yes, Inflation has fallen on back of lower food prices and we expect Inflation trajectory to be lower at around 4.5% over the next one year. We expect RBI to cut rates by 50 basis points over the next three months.

Mr. KarthikrajLakshmanan

Excerpts:

1. What will the key driving factors for markets going ahead? How are your funds positioned in the current market conditions?

The key driving factors over the next one year for the domestic economy will include:

1. Stable Inflation
2. Low Interest rate regime
3. Implementation of multiple reforms i.e. Demonetization, GST, etc., to aid shift from unorganized to organized

We believe this government has a long term approach towards strengthening and resolving domestic variables. Union Budget to be presented in Feb 2017 will be another key milestone to watch. In past Union budgets, government has mentioned about its intent to focus on infrastructure spending lead economic recovery, predictable and low corporate tax regime & balance focus between rural and urban population.

While we all expect interest rates to decline, it will be interesting to see the pace and timing of the same. The likely slowdown of the growth engine in the aftermath of demonization can force RBI's hands and we could see a 50 bps cut sooner rather than later. We expect 50 bps rate cut by March 2017.

We believe, BFSI sector is likely to be one of the biggest beneficiary of economic recovery, lower interest rates & stronger credit growth.  We are overweight on private banks, which have shown a good track record for profitably gaining market share, have a good mix of retail and corporate loans, and are well capitalized. We are positive on select PSU banks.

Among retail asset financing NBFCs and Housing Finance companies, the high valuations that prevailed earlier have corrected post demonetization and look more attractive. In the short term, there may be some increase in loan slippages but may not end up in significant higher credit costs. Once the new currency notes circulation becomes adequate in coming months, the collections should normalise for these companies. There may be a few months of lower growth for them. However, the structural story remains intact.

Another sector that we are positive on from a 2-3 year perspective is cement. Here some of the large and efficient players continue to add capacity. Demand is expected to improve over this period, while supply will be more restricted.

We are underweight information technology sector. Besides, we are also underweight on Auto, Oil & gas and Consumer non-durables.

2. Has the change in government proved beneficial to economy so far? How?

The government has taken various reform measures in last couple of years which include Jan Dhan accounts for financial inclusion and facilitation of direct benefits transfer, crop insurance, low-cost housing scheme, improvement in ease of doing business, passage of bankruptcy code, encouraged competitive federalism amongst states,  Goods & services tax bill and Demonetization of high value currency recently. Of these, Goods & services tax is one of the most important measures with long term structural positive potential to bring the informal sector into the tax ambit, increase tax buoyancy and eventually reduce tax rates. We believe demonetization would pave the way for implementation of GST as it leads the economy to move towards cashless transactions.

3. How do you perceive the government's demonetization move? What are negative and positive implications?

Government's move to demonetize higher denomination currency and replace with new notes would have a positive impact on Indian economy on a structural basis. While In the short term, the consumption sector might get impacted due to high cash usage, property prices may see correction and overall economy would miss out on some regular business leading to lower GDP and earnings growth for FY17, the longer-term positives will be many, in our view, if the new currency is rolled out to a sufficient level in next month or so to ease the cash crunch being witnessed currently. In the process of demonetization, we believe some portion of the demonetized currencies deposited with banks may stay in the form of CASA (Low cost) deposits which will add to their topline (Net Interest Income). We believe the deposit accretion due to this move could lead to further lower interest rates in coming months. Out of the total high value currency, the amount that does not come back to the banking system will be extinguished and would be a surplus for the government. Besides, some of the unaccounted income might get reported leading to better tax revenues this year. The move to focus on bringing more people under the tax net would lead to better tax buoyancy and provide room to lower tax rates in the medium to Long term. Also, this would help the formal industry as it gains share. Demonetization would pave the way for GST implementation next year and help in financial inclusion. Hence, while the short-term disruption is likely, we believe the long-term potential benefits of the move outweigh.

4. What are the essential traits for the stocks to be in your portfolio?

At BNP, we follow the investment philosophy known as BMV (Business- management- Valuation). As per our philosophy, we analyze the business of the company for secular trends, uniqueness of business model and other advantages like strong brands, low cost production advantage, license in a regulated business, network effect, etc which provide sustainability and higher visibility to the company's earnings. we also evaluate the management's execution capability and corporate governance. Besides, clearly being growth focused, we buy companies with higher earnings growth at reasonable valuations.

5. How are the market positioned to face global clues?  Share your views on global economies and their impact on India?

The global equity market are expected to be influenced by certain developments going forward. These would include the performance of the Trump administration, the likely hike in interest rates by the US Federal Reserve and the developing political scenario in Europe.

Overall developed market economies i.e. Europe, USA and Japan will continue to exhibit low growth. In the USA, if President Trump follows up on his campaign promises, we could see a fresh round of investment in the country's infrastructure, lower individual and corporate tax rates and increased trade protectionism. This has the potential to lift US economic growth prospects some time down the line. The probability of a Fed rate hike in December has gone up substantially and has led to the US dollar strengthening. As a result, most emerging market currencies are correcting. Another interesting development to watch out for is the developing political climate in the EU.

While global cues are always important to gauge the direction of foreign fund flows, in the medium to long term, the Indian equity market will be primarily swayed by the trajectory of earnings growth. 

6. Is India still an attractive investment destination?

Barring the short term impact of demonetization on growth and the emerging market sell-off since US Presidential elections, we believe India offers a good growth opportunity as most of the macro-variables are moving in the positive direction, local currency has been stable in last few years, reform measures are likely to contribute positively and State governments' increasingly focus on development as a way to get re-elected . India continues to be amongst the fastest growing economies globally with favorable demographics in terms of median age & working age population. India is relatively less dependent on external trade compared to other emerging markets.

7.Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio? 

We are overweight on the banking and financial services space. In the case of banks, as their CASA ratio improves, interest rates will go down. People will come into the formal banking system from cash system leading to higher growth. And as some of the cash economy people develop a banking track record, it will be easier for them to get funding from the organised sector. This will give a fillip to retail sector lending.

We are overweight on private banks, which have shown a good track record for profitably gaining market share, have a good mix of retail and corporate loans, and are well capitalised.We are positive on select PSU banks. 

Among retail asset financing NBFCs and Housing Finance companies, the high valuations that prevailed earlier have corrected post demonetization and look more attractive. In the short term, there may be some increase in loan slippages but may not end up in significant higher credit costs. Once the new currency notes circulation becomes adequate in coming months, the collections should normalise for these companies. There may be a few months of lower growth for them. However, the structural story remains intact.

Another sector that we are positive on from a 2-3 year perspective is cement. Here some of the large and efficient players continue to add capacity. Demand is expected to improve over this period, while supply will be more restricted.

We are underweight on information technology. These are good companies, with good management and good return ratios. However the growth outlook is muted for the next couple of years. We follow a BMV framework: business, management, and valuations. And in business we look for growth focused businesses. Where growth is lacking, we tend to avoid those sectors. That is why we are underweight on IT at present, where the visibility for growth is limited.

Besides, we are also underweight on Auto, Oil & gas and Consumer non-durables.

8. Donald Trump's victory and impact on India, how you will explain it?

Indian Information technology (IT) sector is significantly dependent on the United States. While US election results add to mid-term uncertainty on IT spending into FY18, FY17 guidance remains unchanged for most Indian IT services companies.

Based on President Donald Trump's views during his campaign, it is believed that his policy will be expansionary, focus on infrastructure spending, lower taxes and He may also go in for a policy of trade protectionism. The probability of a Fed rate hike in December has gone up substantially and has led to the US dollar strengthening. The dollar index is at a multi-year high. Most emerging market currencies are correcting. While the Indian rupee has been steady for the past couple of years, it has participated in the recent correction as there have been FII outflows.

India has also been impacted by the broad emerging market sell-off. Trade protectionism may affect India less on a relative basis to other emerging markets because of lower direct trade exposure to the US and it is also more of a domestic consumption focused economy. Besides, India's macro-economic situation is much better today than it was in 2013.

9. Has the inflation started to fall again? What will be the RBI's move in coming policy amidst global and domestic events?

Headline CPI inflation has been moderating for last few months and the latest reading was lower at 4.2% for October 2016 led by lower food & fuel prices. However core inflation has hovered around 5%. With demonetization impacting demand too, CPI inflation may be lower and may be around 5% levels by the end of the financial year. We believe the RBI may cut interest rates by 50 bps till March 2017 in order to boost growth especially post the short term disruption caused by demonetization.

10.How often do you re-balance your equity allocation?

We do not actively take cash calls. If Business fundamentals of any company deteriorates we sell it and invest in other ideas that fit in our philosophy.

11. Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

Our investment style is to buy companies with a long term investment horizon, which is reflected in our bias towards B2C companies and structural themes like consumption / retail financials in India.

As highlighted above, we are overweight Financials and Cement while we are underweight Information Technology, Oil & Gas, Auto and Consumer non-durables.

Given the lower interest rate scenario, likely movement of some savings from physical to financial assets due to demonetization and higher earnings growth visibility in the medium term, prospects for equities as an asset class looks positive from a 3 year perspective and hence we believe long term investors have good opportunity to make healthy returns by staying invested in the same.

Mr. Akhil Mittal

Excerpts:

1.What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?

Since beginning of 2015, RBI continued its accommodative stance, with cumulative rate cuts totalling 150bps. This was made possible by the CPI Inflation coming off despite a second successive year of deficient monsoon, largely aided by plunging crude prices and high base effect. The macroeconomic scenario was a mixed bag with inflation, CAD and reserves doing well but still reasonable slack in the economic activity although the GDP still ticked the world's highest at 7.6%.

The sovereign bond yields remained volatile during the last 6 months. The 10-year benchmark yield which had touched a low of 7.5% in October 2015, when the RBI cut its policy rates by 50 bps from 7.25% to 6.75% taking comfort from the falling inflation, moved up during the subsequent months, mainly due to global factors. The US Dollar rally induced by the divergent monetary policy and the concerns of Chinese slow down led to Rupee coming under pressure, as the FIIs turned net sellers. Added to this, the concerns on the Government's intent to stick to the fiscal consolidation path resulted in 10-year benchmark yield touching a high of 7.88% during the month of Feb-16. However, since the month of March, the sentiments improved as both the domestic and external factors turned favorable. The big positive for the bond yields came from the budget, when the Government decided to opt for macro stability and stuck to the earlier agreed deficit reduction plan (3.5% for FY17 vs 3.9% for FY16). Another key positive for the fixed income market was moderating inflation situation. Added to all these macro factors, RBI changed the liquidity stance from deficit mode to neutral mode. All these factors resulted in massive rally in fixed income market and sharp fall in yields across the yield curve. 10 yr G-sec yield fell to 6.95% as on 27^th Sept and we also witnessed similar fall in corporate bond yields.

Going ahead, we believe that monetary policy continues to look at easing space from fall in retail inflation, while keeping other factors at back of mind. With FY17 CPI inflation target of 5% having even probability of getting achieved, we believe that there is some space for easing with RBI and expect a 25 bps cut. However, any action beyond that will be purely data dependent. We expect 10 yr G-sec to trade in range of 6.75% - 7% in near term and settling around 6.65% - 6.90% by end of financial year.

2. What is your strategy for short term funds? What is your exposure to long term funds and why?

Tata Short Term bond fund aims to generate regular accruals through investments in high credit quality debt and generate capital gains from fall in interest rates. The average maturity of the fund has been in range of 2 years to 3 years in recent past and given the easing monetary policy cycle and current position therein, we are currently cautiously bullish on duration. Especially at shorter end of the curve, we believe the risk adjusted return endeavour is more realisable.

3.Kindly share your views on recent inflation movement? Where will the inflation curve move in near term? Why?

India headline inflation surprised on the downside in August 2016 at 5.05% vs 6.1% in July. The decline was driven by a combination of lower food prices and favorable base effects. Food price inflation fell sharply to 5.9% y-o-y from a 23-month high of 8.4% in July, led by a sharp fall in prices of vegetables (-3.7%), pulses (-1.0%) and meat & fish (-1.3%). Meanwhile, core CPI moved up marginally to 4.7%, from 4.6% in July. We expect the headline CPI inflation to moderate to below 5% in coming months owing to base effects, but we expect it to revert back towards the RBI's target of 5% by March 2017.

However, potential increase in house rent allowances and GST implementation could push headline inflation above the RBI's 4%+/-2% target in 2017.

4.What's your investment strategy?

We follow a philosophy of SLR in managing our Fixed Income Portfolio's where S for Safety, L for Liquidity and R for Returns is the guiding principle. We maintain high credit quality in our portfolios and do not go down the credit curve. This ensures safety of capital of investors. While allocating the portfolio, we maintain ample liquidity to ensure swift change is possible in case of change of stance / events. Returns are envisaged to be generated in line with objectives of the scheme and risk is contained in the process

5.How often do you re-balance your debt allocation?

We keep a close watch on markets and our portfolios. In case any event / occurrence in the market requires a change in stance, or any developments wherein our views have changed, we rebalance our debt allocation on real time basis. This is a continuous process and not dependent on period / pre-specified date.

However, we have formal process of discussions / market update and forming a view on markets. We do this through Investments Committee meeting / Debt Investment Committee meeting, which happens periodically

6.If the interest rates fall further what will be your strategy for debt funds?

Given the current position we are in the monetary policy easing cycle, and the future target of CPI inflation, we believe RBI has some space for easing but contingent to many variables. As we go accomplishing the CPI targets and hence easing, we will reach a point where further fall in inflation will be difficult. There, we expect RBI to change stance to neutral and we expect market to start contemplating for an eventual end to easing cycle. This would mean building in a term premium for longer duration, which will result in furthersteepening of yield curve.

In line with our view on markets, if interest rates fall earlier than expected / or steeper than expected, we would be looking to reduce interest rate risk (after having generated capital gains) by reducing duration

7.What is your advice to the investors?

We would ask investors to stay invested for a longer time period and choose product category depending upon their risk appetite. If one has greater appetite for risk and longer holding horizon, long duration funds could be considered, whereas for investors with shorter investment horizon and / or lower risk appetite, short duration funds could be considered

8. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

The recent headline inflation reading has surprised a bit on the downside. Large part of this fall can be attributed to food price decrease. Food prices especially the perishables, are highly volatile and persistence still needs to be ascertained. Meanwhile, core CPI moved up marginally to 4.7%, from 4.6% in July. Going ahead, movement in pulses prices and any increase in crude prices are likely to impinge on inflation in the economy. Stickiness in the underlying gauge of inflation limits the scope of any sharp downside movement in inflation.

On the policy front, RBI has indicated that it would look through the purely statistical element of movement in inflation, we still believe that benign core inflation provides some space for easing. Hence, given the recent readings, and evolving price dynamics, we do not rule out a rate cut in October policy meet. However, any policy move beyond 25 bps will be purely data dependent.

9. Foreign investors are shying from Indian markets. How do you explain it even after Prime Minister Narendra Modi's 29 February budget sparked a rally in bonds and the rupee?

Foreign investors generally follow the broader capital flow in risk-on / risk-off moves. India's macro situation has been stabilizing and standing out within other EM peers over last 2 years. Thus, India has attracted lots of capital flows in last year or so. In recent times, the global volatility has increased and factors affecting capital flows have become more volatile.But even in this current scenario, India still continues to remain attractive, albeit temporary pause in inflows.

Mr. Pradeep Gokhale

Excerpts:

1. What will the key driving factors for markets going ahead? How are your funds positioned in the current market conditions?

The equity markets have rerated substantially from February lows and valuations are slightly higher than long term averages. The progress from hereon would be dependent on the earnings recovery. While EPS growth estimated for FY17 is not very high, estimates for FY18 factor in growth in the region of 18-20%. The other factor, obviously is the global risk on risk off sentiments which determine the global fund flows into or out of equity as an asset class.

We feel the earnings growth in India will come primarily from improving private consumption (helped in part by monsoons and the 7^th pay commission award), rising public sector capex and the impact of lower interest rates on corporate profits. Our portfolios are positioned to benefit from these trends and hence are overweight domestic cyclical such as consumer discretionary, cement and select construction and industrial companies and retail lending oriented banks and NBFCs.

We are underweight sectors with strong global linkages such as commodities and IT and also on corporate banks due to the impact on asset quality due to slower global growth.

2. Has the change in government proved beneficial to economy so far? How?

We, for the first time in last 30 years, have a Government that has full majority in Lok Sabha. Thus, we see pace of decision making and execution improving. Government measures in general are oriented towards improving productivity levels in the economy. There is clear focus on improving infrastructure while at the same time keeping fiscal deficit and inflation under control. Reduction in subsidies, focus on implementation of Aadhar, steps to improve financial inclusions, UDAY scheme, progress on GST, strong increase in public sector capex, are some of the examples of Government initiatives. Also, the Government seems to be taking decisions with a longer term view and not trying to do aim for short term results.

3. What are the essential traits for the stocks to be in your portfolio?

We primarily follow Growth at Reasonable Price (GARP) style of investing. We believe in buying businesses with good earnings growth prospects over the medium term, which are run by quality managements with a track record of good capital allocation, with reasonable levels of debt. We focus on company's return of capital employed (ROCE) and cash generation, earnings growth prospects, management quality, valuations and liquidity. Our experience has been that even if one buys good businesses at fair prices, the compounding of earnings gives you good return over a two- three year period. The core of our portfolio is built using this approach. We also sometimes use the value strategy, where reasonable quality businesses are available at attractive valuation. However, such strategy is used more tactically.

4.How are the market positioned to face global clues?  Share your views on global economies and their impact on India?

In recent times, global markets have been dealing with the prospect of 'normalisation' of interest rates by US Fed. At the same time, we have negative interest rates in many developed markets. A rise in interest rates can impact equity markets in the short term. However, we feel markets are in a sense prepared for it and it would not impact the longer term trend of the markets. However,many large economies of the world such as Japan, European Union, China are going through a phase of low growth. In recent times, we have seen some stabilization and improvement in these economies, which has been positive for equity markets across the globe. Any further slowdown in growth, particularly in China would have an adverse impact on the markets.

5. How is India Inc's earnings picture getting affected by the collapse in commodities? Is it possible to scale it?

The collapse in commodities has helped the commodity consuming sectors such as consumer staples, consumer durables, autos etc. These sectors have seen EBITDA margins improve to historically high levels. It has also helped moderate inflation and thus given a boost to consumer demand. However, it has badly impacted the profitability of commodity producers. This also has had an adverse impact on the asset quality of corporate lenders. Recently, we have seen a stabilization of commodity prices at lower levels. If these prices remain stable at current levels, next year we would not have the negative earnings impact as it is already in the base.

6.Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

As stated above, we are overweight on domestic cyclical such as consumer discretionary, cement and select construction and industrial companies and retail lending oriented banks and NBFCs. We are also overweight on pharma and agrochemicals, more on a bottom up stock basis. We are underweight IT and commodity sectors due to weak global growth. We are also underweight corporate banks due to high NPA provisioning and resultant weak profitability.

As regards what kind of stocks that never enter my portfolio, I would say that the saying 'Never say never' is true in the investment business also where there are examples of companies staging smart turnarounds from the brink of bankruptcy. Having said that, generally I try to avoid businesses with low entry barriers or where the level of value addition by managements is low, companies with high debt levels and history of capital misallocation.

7.How your equity schemes differ from your competitors'?

Growth at reasonable price (GARP) is my preferred investment style. Thus typically my portfolios have companies with secular growth potential and higher return on equity (ROE) which is normally associated with higher P/E and P/B ratios. Generally, we have a lower share of the typical value stocks. Also, our portfolio turnover is also on the lower side.

8. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

We have seen some increase in inflation readings, partly due to lower base as the previous year we had record low inflation due to sharp fall in commodity prices. However, the increase in inflation has been moderate and within the limits stated by RBI in its monetary policy. Thus we don't expect a structural rise in inflation unless global commodity prices improve substantially. Our debt team expects RBI may do a rate cut of 25 bps by March 2017.

9.How often do you re-balance your equity allocation?

Typically, we don't take large cash calls in the equity portion of the balanced fund. Our equity investment ranges from 70-75% of the fund. If by capital appreciation, equity portion exceeds 75% of AUM, we tactically book profits. Similarly, in a market correction, if the value of equity portion goes down, we add to our equity weight.

10. Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

Our strategy is more focused on companies with earnings growth. In the equity market rally from February lows, value stocks have outperformed growth stocks. Thus the valuation differentials between value and growth stocks are not very high. Hence, we feel returns going forward will be more determined by earnings growth prospects. Hence, at this juncture we are not materially changing our strategy.

11. What would you like to advice to the investors in the current scenario? What strategy would you suggest the investor to adopt at this point of time in the market?

We are positive on the Indian equities continues over the medium term. The Indian equity story is structurally very attractive due to factors such as its demographic profile, low household debt levels, scope for increasing share of financial savings within the total savings pool, increasing urbanization. The macro-economic fundamentals remain strong and earnings outlook is improving. We would therefore advise investors to continue to invest systematically in Indian equities and use any volatility caused by global factors to their advantage.

Mr. Puneet Pal

Excerpts:

1. What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why?

Over the last couple of months' yields have been coming down. The benchmark 10 yr bond yield has softened by 35bps. This rally in domestic bond yields is in sync with bond yields coming down world-wide. Domestic money market liquidity has also improved which has supported the rally. Going forward we expect the bond yields to come down by further 15-20 bps over the next 6 months.

2. What will the key driving factors for yields?

The key driving factor for yields will be improved liquidity conditions due to further open market operations by RBI, Normal monsoons leading to lower food prices and lower bond yields world wide.

3. What is your strategy for short term funds? What is your exposure to long term funds and why?

In our short term funds we are running a duration of 2.5 yrs and intend to keep the average duration in a range of 2-3 yrs. Our view is that the short end of the curve will continue to be supported by easy liquidity conditions and expectations of some more monetary easing by RBI. In long term funds we are currently running duration of 7 years as we still expect long bond yields to come down by 15-20 bps.

4. Kindly share your views on recent inflation movement? Where will the inflation curve move in near term? Why?

Inflation numbers over the last couple of months have surprised to the upside due to higher food Prices but we expect inflation to moderate going forward as food prices will likely ease on normal monsoons and commodity prices have also moderated with Oil coming down by 15% in the last 2 months.

5. What's your investment strategy?

Our Investment strategy revolves around generating superior risk adjusted returns over the long term. We endeavour to achieve this by superior asset allocation and dynamic duration management which is backed by strong macro research.

6. How often do you re-balance your debt allocation?

We review our asset allocation on a monthly basis though it can be more frequent depending upon evolving market conditions.

7. If the interest rates fall further what will be your strategy for debt funds?

We expect rates to fall further and as such our various portfolio's are positioned to take advantage of such a scenario within the respective market positioning of the funds.

8. What is your advice to the investors?

From a Fixed Income perspective , our advice to the investors is to have a 60:40 allocation to short term and dynamic bond funds respectively. We will also advice investors to invest in debt funds from an asset allocation perspective and not from a short term tactical perspective.

9. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

As stated earlier , we expect inflation to moderate and the recent rise in Inflation is due to seasonal factors which are likely to reverse with normal monsoons and also the fact the oil has come down by 15%. We expect status quo on rates in the upcoming credit policy.

10. When and how do you see rural consumption recovering?

About 45% of monsoon season is over and it has been normal so far. With good monsoon we expect rural economy to do well, coming off the base of two consecutive poor monsoon. The rural economy is likely to perform well in near future . The impact on volume growth may be visible 3QFY17 onwards, when the cash flow improves.

11. Foreign investors are shying from Indian markets. How do you explain it even after Prime Minister Narendra Modi's 29 February budget sparked a rally in bonds and the rupee?

FII Inflows into debt have been quite robust over the last couple of years. FII flows into debt have been USD 34 bn (approx) since the beginning of the calendar year 2014 much more than the Equity Flows of USD 21 bn (approx). Thus the FII flows have been quite robust for the last 2-3 yrs and it is important to see the overall trend , which is quite good.

Mr. Murthy Nagarajan

Excerpts:

1. What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?

Government bond yields have moved down after the British Exit from the European Union. Global bond yields have fallen by 30 to 40 basis points after the Brexit event. US ten year yields is now trading at 1.38% levels compared with 1.70% levels, the 30 year is trading at 2.09% vs 2.45% levels before the Brexit event. Globally, 12 trillion of developed market bonds are trading at negative yields, signifying deflationary conditions in the developed markets. Countries like Japan, Germany, Switzerland has 10 year yields trading in negative territory.

Indian bonds yield has also fallen by 10 basis points as the rate hike expectation by the Federal Reserve has been postponed to next year. The Indian rupee which has touched a low of Rs 68.20 against the dollar is now trading at Rs 67.10. The ten-year bond yields are expected to go down to 7% levels from the 7.25% prevailing as of today. The Indian monsoon is expected to be 106 % of the 10-year average which should dose food inflation. Pulses which has displayed 40 to 50% increase in prices on a year on year basis is expected to moderate in the coming months. The total production of pulses is expected to be around 20 million tons against 17 million tons of last year. The government has already initiated imports of pulses from Myanmar and Mozambique to increase supply of pulses in the domestic markets. With monsoon being normal, food inflation is expected to moderate in the coming months, which should allow RBI to achieve its CPI inflation target of 5 % in the current financial year.

With Raghuram Rajan resigning from 04 September 2016, the new RBI governor contenders are expected to be less hawkish. Real interest rates which are the difference between one-year T- bills expected CPI inflation in one year which was to be around 150 to 200 basis should move towards 100 basis points with the appointment of the new governor. This should create room for RBI to cut interest rates by 50 basis points. RBI has also re-iterated its commitment to keep liquidity in neutral zone which will induce RBI to do Open Market Purchase of Government Securities to increase liquidity in the system. RBI has to provide more liquidity due to redemption of 20 billion of FCNR B deposits and 6 billion of oil payment to IRAN. All these should bring the ten year closer to 7% levels, 100 basis points over the expected Repo rates of 6% levels.

2. What is your strategy for short term funds? What is your exposure to long term funds and why?

We are running a maturity of 13 to 14 years in our Quantum Dynamic Bond Fund as we expect easy liquidity and cut in repo rates in the coming months.

3. Kindly share your views on recent inflation movement? Where will the inflation curve move in near term? Why?

Inflation will move towards 5 % levels as food inflation will come down due to good monsoon.

4. What's your investment strategy?

Invest only in G sec and AAA PSU bonds as the corporate bonds spread are not favorable.

5. How often do you re-balance your debt allocation?

Depends on the spread between corporate bonds and G sec and the shape of the yield curve.

6. If the interest rates fall further what will be your strategy for debt funds?

We may reduce our maturity by taking profits.

7. What is your advice to the investors?

Invest in Dynamic or short term bond funds as interest rates are expect to be stable in the medium term

8. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

We expect CPI inflation to come down due to good monsoon, we expect RBI to sit pat on rates in the August policy.

9. When and How do you see rural consumption recovering?

With good monsoon and implementation of 7th pay commission rural consumption is expect to pick up from next calendar year onwards.

10. Foreign investors are shying from Indian markets. How do you explain it even after Prime Minister Narendra Modi's 29 February budget sparked a rally in bonds and the rupee?

It is a global phenomenon and domestic investors are buying into the growth story of India. We are seeing buying from FII again in the debt market due to attractive spread and stable currency. FII have purchased around 1 billion USD of Indian debt in the last 10 days.

Mr. Shiv Chanani

Excerpts:

1. The equity markets are turning volatile? What will the key driving factors for markets going ahead?

From a domestic point of view, key factors to watch out would be a) progress of monsoons; b) addressing bank NPL issue and c) continued public investment. From global perspective, one would need to monitor the progress of Brexit - its impact on global trade, global growth and eventual response of monetary authorities across the world.

2. Has the change in government proved beneficial to economy so far? How?

The new government has chosen to invest substantial time and resources in getting the systems and process right rather than embarking on massive fiscal expansion. We believe this has been a prudent move keeping in mind the fiscal constraints as also laying the foundation for a strong steady growth for the future.

3. What are the essential traits for the stocks to be in your portfolio?

Stocks are selected from a medium term horizon based on our 5S methodology. The 5S pertains to (i) Simple Business (ii) Scalable Opportunities (iii) Sound Management (iv) Sustainable competitive advantages and (v) Steady cash flows. The portfolio largely deploys buy and hold strategy allowing the investee companies to realize their full potential over the horizon.

4. How are the market positioned to face global clues? Share your views on global economies and their impact on India?

Markets have clearly overcome the initial shock of Brexit event. However, these are still early days since everyone is trying to figure out how the event will eventually play out. This adds uncertainty to the environment. However, as we look at the global scenario, clearly India is easily one of the best placed economies with GDP growth in excess of 7%, stable currency and inflation under control. Having said that, Indian economy will certainly be impacted in case there is a significant slowdown in the global growth both in terms of trade as well as investment flows.

5. How is India Inc's earnings picture getting affected by the collapse in commodities? Is it possible to scale it?

India is a net consumer of commodities. Hence, a decline in commodity prices have helped most of the companies which have been reflected in higher margins of the manufacturing sector in FY16. However, the collapse in commodities did had a collateral damage on the metals company, which is one of the largest component of bank NPLs currently.

6. Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

Currently, we are in an environment where global outlook is marred with uncertainty but there is a clear pick up in the domestic economy. Hence, at this point of time, we prefer themes which will benefit on account of domestic growth such rural, consumption, and capital investment. Themes we would like to avoid are the ones where export component would be higher as well as commodities. Stocks, which do not fit our 5S investment philosophy, will not form part of the portfolio.

7. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

Though inflation has picked up from the low, we expect it to remain range-bound on account of structural measures taken by both RBI as well as the government. Furthermore, a good monsoon should also help in keeping food inflation under check.

8. How often do you re-balance your equity allocation?

Portfolio allocation is a dynamic process dependent on number of variables such as market movements, company specific development, fund flows, etc.

9. Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

As stated above, our portfolios are now more aligned with domestic plays and we are preferring to go underweight on sectors with global linkages.

10. What would you like to advice to the investors in the current scenario?

Investors should not get un-nerved by volatility in the markets as this is going to be the new norm. It is necessary to keep a medium to long term horizon while investing in equities. Given the strong outlook for Indian economy, equities, as an asset class is highly likely to fulfill its promise of wealth creation.

11. When and How do you see rural consumption recovering?

Given the prognosis of a good monsoon, we expect this to translate into money in the hands of the consumers in the second half of current fiscal year. Consequently, festive season of Dussehra and Diwali may truly reflect the upswing in rural consumption.

Mr. Akhil Mittal

Excerpts:

1.What are your views on fixed income market? How have the yields moved and which direction you see them moving in near to mid-term and why? What will the key driving factors for yields?

Since beginning of 2015, RBI continued its accommodative stance,with cumulative rate cuts totalling 150bps. This was made possible by the CPI Inflation coming off despite a second successive year of deficient monsoon, largely aided by plunging crude prices and high base effect. The macroeconomic scenario was a mixed bag with inflation, CAD and reserves doing well but still reasonable slack in the economic activity although the GDP still ticked the world's highest at 7.6%.

The sovereign bond yields remained volatile during the last 6 months. The10 year benchmark yield which had touched a low of 7.5% in October 2015,when the RBI cut its policy rates by 50 bps from 7.25% to 6.75% taking comfort from the falling inflation, moved upduring the subsequent months, mainly due to global factors. The US Dollar rally induced by the divergent monetary policy and the concerns of Chinese slow down led to Rupee coming under pressure, as the FIIs turned net sellers. Added to this, the concerns on the Government's intent to stick to the fiscal consolidation path resulted in 10 year benchmark yield touching a high of 7.88% during the month of Feb-16. However, in the month of March the sentiments improved as both the domestic and external factors turned favorable. The big positive for the bond yields came from the budget, when the Government decided to opt for macro stability and stuck to the earlier agreed deficit reduction plan (3.5% for FY17 vs 3.9% for FY16). Another key positive for the fixed income market was moderatinginflation situation, raising hopes of further cut in policy rates, which RBI obliged in April Monetary Policy review. As a result of this, the sovereign bond yields recovered significantly, falling as much as 30-40 bps across the yield curve from the peak levels.

Going ahead, we believe that monetary policy continue to look at easing space from fall in retail inflation, while keeping other factors at back of mind. With FY17 CPI inflation target of 5% having even probability of getting achieved, we believe that the space for easing with RBI is limited. Hence we might be nearing a long pause in rate easing cycle, if not terminal end to the cycle. This would mean that yields can go down with initial rate cuts, but might not react (fall) thereafter. We expect 10 year benchmark sovereign bond to trade in range of 7.25%-7.50% in near term and eventually stabilise in 7.15% - 7.35% by end of financial year.

2. What is your strategy for short term funds? What is your exposure to long term funds and why?

Tata Short Term bond fund aims to generate regular accruals through investments in high credit quality debt and generate capital gains from fall in interest rates. The average maturity of the fund has been in range of 2 years to 3 years in recent past and given the easing monetary policy cycle and current position therein, we are currently cautiously bullish on duration. Especially at shorter end of the curve, we believe the risk adjusted return endeavour is more realisable.

3.Kindly share your views on recent inflation movement? Where will the inflation curve move in near term? Why?

India headline inflation surprised on the upside in April 2016 at 5.39% vs 4.8% in March. The inflation increase has been highest in last 10 months when measured in % month on month (0.7%). Thought the jump can largely be attributed to food prices, core inflation also rose from 4.6% to 4.9%.

In near term, we expect CPI inflation to average around 5.25% - 5.35% for July-Sept 2016. Thereafter, we expect inflation to fall below 5% by December 2016 - Jan 2017 and rising slightly thereafter. Overall, we expect FY17 inflation to average around 5%.

4.What's your investment strategy?

We follow a philosophy of SLR in managing our Fixed Income Portfolio's where S for Safety, L for Liquidity and R for Returns is the guiding principle. We maintain high credit quality in our portfolios and do not go down the credit curve. This ensures safety of capital of investors. While allocating the portfolio, we maintain ample liquidity to ensure swift change is possible in case of change of stance / events. Returns are envisaged to be generated in line with objectives of the scheme and risk is contained in the process.

5.How often do you re-balance your debt allocation?

We keep a close watch on markets and our portfolios. In case any event / occurrence in the market requires a change in stance, or any developments wherein our views have changed, we rebalance our debt allocation on real time basis. This is a continuous process and not dependent on period / pre-specified date.

However, we have formal process of discussions / market update and forming a view on markets. We do this through Investments Committee meeting / Debt Investment Committee meeting, which happens periodically.

6.If the interest rates fall further what will be your strategy for debt funds?

Given the current position we are in the monetary policy easing cycle, and the future target of CPI inflation, we believe further easing by RBI would be limited, and contingent to many variables. As we go accomplishing the CPI targets are hence easing, we will reach a point where further fall in inflation will be difficult. There, we expect RBI to change stance to neutral and we expect market to start contemplating for an eventual end to easing cycle. This would mean building in a term premium for longer duration, which will result in furthersteepening of yield curve.

In line with our view on markets, if interest rates fall earlier than expected / or steeper than expected, we would be looking to reduce interest rate risk (after having generated capital gains) by reducing duration

7.What is your advice to the investors?

We would ask investors to stay invested for a longer time period and choose product category depending upon their risk appetite. If one has greater appetite for risk and longer holding horizon, long duration funds could be considered, whereas for investors with shorter investment horizon and / or lower risk appetite, short duration funds could be considered.

8. Has the inflation started to rise again? What will be the RBI's move in coming policy amidst rising CPI?

The recent headline inflation reading has surprised a bit on the upside. Large part of this increase can be attributed to food price increase. Food prices especially the perishables, are highly volatile and persistence still needs to be ascertained. Going ahead, sequential increase in pulses prices and any increase in crude prices are likely to continue to impinge on inflation in the economy. Stickiness in the underlying gauge of inflation limits the scope of any sharp downside movement in inflation.

On the policy front, though RBI has indicated that it would look through the purely statistical element of such spike in inflation, we still believe that RBI would be closely watching government reaction to such price hikes along with implementation of pay commission recommendations. Hence, given the recent readings, and evolving price dynamics, we believe RBI will stay on pause mode in June review. Unless a big negative global shock comes to fore, which forces RBI to reassess the situation, there is limited room available with RBI to ease.

We expect RBI to ease by 25 bps (assuming normal monsoons) by mid of this FY, and any further easing only if inflation falls credibly below 5% target.

9. Foreign investors are shying from Indian markets. How do you explain it even after Prime Minister Narendra Modi's 29 February budget sparked a rally in bonds and the rupee?

Foreign investors generally follow the broader capital flow in risk-on / risk-off moves. India's macro situation has been stabilizing and standing out within other EM peers over last 2 years. Thus, India has attracted lots of capital flows in last year or so. In recent times, the global volatility has increased and factors affecting capital flows have become more volatile. USD has strengthened against EM currency pack and fear surrounding probable Federal Reserve rate hike in June have increased. This has led to general pause in flows to EM's. But even in this current scenario, India still continues to remain attractive, albeit temporary pause in inflows.

Mr. S. Krishnakumar

Excerpts:

1. The equity markets are turning volatile? What will the key driving factors for markets going ahead?

2016 is a year of volatility for the markets mainly on account of the evident divergence in the monetary policies of the large central banks of the world. The events over the last couple of months have highlighted a much more muted rate hike trajectory by the Federal Reserve (Fed.). On the lower end of the rate spectrum, there also appears to be an increase in the prevalence of negative interest rates in Europe. While, a marginally dovish Fed. read and increasing acceptance of negative interest rates are a sign of muted global growth, it also brings with it some EM attention. It is here that India stands differentiated on the back of its macro strength, fiscal prudence and incremental space for monetary accommodation.

Going into 2016, the monetary policies of the Fed. and the European Central Bank (ECB) are key events to watch out for. While events in China would still remain important, the markets appear much less concerned around any surprise devaluation of the Yuan. Global growth and commodity movements, however, would continue to remain relevant.

The last month has seen the start of some EM differentiation. The month of March has seen net FII equity inflows for nearly every single day. Continued differentiation would highlight India's macro fundamentals and bring more FII attention to the one of the fastest growing economies.

2. What are the essential traits for the stocks to be in your portfolio?

As a fund house we largely believe in India being a growth market and hence play growth. Growth comes from two streams - emerging business opportunities driven by regulation, reforms, technology and demographics & also through differentiated or niche players in mature sectors. We use a GARP - Growth at reasonable price - approach to investing and valuations broadly.

As for as essential traits for stocks selection, we use the 5S approach - Simple business, Scalable opportunity, Sound promoter/management, sustainable competitive advantage which ensure strong profitability, cash-flows for growth capital and right allocation.

3. How are the market positioned to face global clues?

As mentioned above, macro strength, fiscal prudence, inflation control and easing space make the case for India to clearly stand out amongst its Emerging market pack.

4. Which sectors you are considering attractive from investment point of view and why and which sectors you are avoiding and why? What kind of stocks never enters your portfolio?

The economy is getting back on track while benefiting from lower inflation and rates. As investors we are positive on cyclical sectors that feed on the economic recovery theme like industrials, engineering & capital goods, transportation and financials. The potential rise in disposable income on the back of softening inflation in urban India and the seventh pay commission largesse will definitely help consumer discretionary sectors like automobile, lifestyle products, durables, retail and entertainment. These represent our positive bias while we remain negative on Pharma, FMCG, Telecom, IT and Metals.

5. How you'll rate the Union Budget 2016-17 on a scale of 1-10 and why? Any particular announcement in budget which will impact your business, how?

Every budget must be read in context. Given the current challenging backdrop, the simple act of holding on to a fiscal deficit target of 3.5% reflects the government's intent to reform. We have no doubts that this target will be achieved in FY17. Its broad conservatism on tax revenue and expenditure projections works further in adding conviction.

The budget promises to revamp and optimise the way the economy functions. In the overall scheme of the budget, the rural economy appears to receive more attention. It starts with addressing the need to bring about income security rather than food security. It proposes extensive electrification of villages, increases the penetration of rural roads. It also attempts to bring about MSP transmission for farmers, increases credit flow to the agricultural sector. It encourages states to pass the APMC act and join a common e-market platform for agricultural marketing in wholesale markets. It empowers the gram panchayats and municipalities and makes sizeable allocations to them. All these over time would greatly work in favour of structurally easing the food inflation component in the CPI. This would give sustainable medium-term comfort to the RBI on rates.

Overall the budget keeps the infrastructure investments going while renewing attention on farm, rural sectors in order to push for a balanced growth.

6. How often do you re-balance your equity allocation?

Asset allocation between equity and debt in our hybrid funds are a function of the mandates that we run. Within the permissible range as per mandate, a monthly review is done.

7. Kindly share your investment strategy with us. Are you making any changes to your scheme's portfolio as we witness change in market?

From a top down approach, our portfolios are geared broadly for the economic recovery seen, driven by the thrust on infra spending. Another theme we are playing is on the beneficiaries of the global commodity deflation across different sectors. The recent focus on the rural and farm sector along with the seventh pay commission largesse should help the rural story.

While one may look at these broader themes, the Indian equity market remains a stock picker's delight with bottom up investing generating alpha for the investors. Our schemes like Select Midcap, Smile, Entertainment Opportunities, Infra and Equity multiplier are clear examples of the same.

8. What would you like to advice to the investors in the current scenario?

2016 has seen the markets swing both ways, being mostly influenced by global markets. This very volatile nature of the markets in 2016 highlights the relevance of SIP investing. It also brings out the importance of staying invested.

The Indian story is a secular one that has been unfolding steadily over the last couple of decades. The longer an investor stays invested, cognisant of her risk-return threshold, the more beneficial it would be for her. Refrain from timing the markets; leave that to fund managers with a proven record. Anytime is a good time to invest in India. Times of market weakness are even better periods.

9. How is India Inc's earnings picture getting affected by the collapse in commodities? Is it possible to scale it?

The weakness in nifty / broad market earnings in FY16 can be clearly attributed to the significant drop in earnings of commodity companies. Nifty ex global cyclicals &psu banks has been delivering about 8-9% earnings growth.

10. When and how do you see rural consumption recovering?

Back to back poor monsoons have greatly affected India's rural consumption. While the roll out of the pay commission would be a welcome boost to consumption in general, good monsoons would hold the key to a sharp revival in rural consumption.