India is placed positively relative to other emerging market due to better growth visibility

Do you expect more rate cuts from RBI this year?

Yes, there is a probability of further rate cut by the RBI if inflation remains subdued for a while. The progress of monsoon in July-August would have a bearing on the inflation outlook.

Do you expect acceleration in earnings growth in Q1 relative to the previous two quarters?

We do not see much acceleration in earnings growth in Q1 relative to the previous two quarters.

Do you see higher FII flows into India equity market over the next 12 months?

FII have been overweight on the Indian market and India has received good allocation over the last 12 months. India would still remain preferred country for their overall allocation in equities as growth opportunities elsewhere are less clear.

How is India placed relative to other emerging markets from a portfolio investment flow perspective?

India is placed positively relative to other emerging market due to better growth visibility, strength of domestic economy, less reliance on exports and lower global commodity prices.

What is your outlook on various sectors? Which sectors are you overweight in SBI Bluechip Fund? Which sectors you see performing better relative to others in the short to medium term?

We are overweight on Industrials, Auto and Auto Ancilliary and Pharma sectors in our portfolio. In case of Industrials and Auto, while volume growth ramp up may take time, lower commodity prices would lead to better margins and hence earnings growth relative to market would be better. In case of Pharma, the improved outlook on product approvals can lead of sustainenace of high topline growth for the sector with good margins. Hence, we remain positive on these sectors.

The Government has set April 2016 as the timeline for implementation of Goods and Services Tax (GST). In your view, is the timeline realistic?

We may see a delay in the implementation of GST, but it is a step in right direction and would be positive as and when implemented, though can create short term volatility for businesses, which start to operate in the new environment.

Do you see near term benefits for the economy from the stringent law against Black Money announced by the FM in the 2015 Budget speech? With stringent anti Black Money law, do you see more investments flowing into equity / mutual fund assets that would have otherwise gone to asset classes which usually involve cash transactions?

The money released from the cash economy will go to more productive channels, a part of which could also come to equity/mutual fund assets. The percentage savings allocated to this asset class is very miniscule and there is good opportunity for a shift from other assets classes like gold and real estate where returns are coming down.

Are you making any changes to the portfolio of SBI Bluechip Fund based on your current outlook?

Our portfolio is aligned to the current outlook, and we keep making changes based on change in outlook as equity investment has to be very dynamic to reflect any changes in economic and corporate sector outlook.

Equity markets have run up significantly in the past 12 to 15 months. Should investors start moderating their return expectations going forward?

Equity markets are in consolidation mode for last 6-9 months post a significant rally preceding that. We believe that valuations are reasonable, being slightly above the long-term averages. With the growth outlook likely to improve over the next 12-18 months, the investors can at least expect returns in line with the earnings growth for the year without any further re-rating of the Indian market.

What is your advice to investors in terms of allocating their investments between large cap and midcap funds over the next 2 to 3 years?

We believe that investors have to take into account their risk appetite while making allocation between large cap and mid caps. In general 60-70% allocation to large caps and rest to mid caps can provide good risk reward balance.

In the backdrop of the current market scenario what is your advice to mutual fund equity investors? And the funds from your stable that would be suitable at this point in time?

Investors should look to increase their equity allocation vis a vis other asset classes as the returns outlook for equity is likely to be far superior vis a vis other asset classes over the next 3-5 years. They should invest in equities with minimum investment horizon of 3 years or more. We have funds across categories which the investors can consider depending upon their risk appetite which include SBI Bluechip (large cap), Magnum Midcap (midcap), Magnum Multicap (multicap) and Magnum Taxgain (ELSS category) among other funds.

Know More About SBI BLUECHIP FUND

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.