Interview Excerpts: Arvind Sethi, MD & CEO, Tata Mutual Fund, in an interview with ET Now, shares his views on the markets. Link: http://articles.economictimes.indiatimes.com/2015-05-06/news/61865545_1_arvind-sethi-bull-market-midcap-stocks

1. Investors to get good market levels to invest in short term:
Arvind Sethi, Tata Mutual Funds
By ET Now, 6 May, 2015, 04.49PM IST
In an interview with ET Now, Arvind Sethi, MD & CEO, Tata Mutual Funds, shares his views on the markets. Excerpts:
Read more at:http://economictimes.indiatimes.com/articleshow/47175937.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
ET Now: What would you attribute the selling to?
Arvind Sethi: It is a natural correction in the longer­term bull market. I have a list of things which will help you paint a very bright picture of India ­­
the demographics, etc ­ but when you look at the governance issues, it is very easy to paint a negative picture as well. As we go through the
phases in the market, you just see the sentiment move towards the more positive side or the negative side. This is just a correction. If you look at
six or seven months back, we are at levels we were in September. So, the markets have really gone nowhere. Investors should be thrilled about
this correction because they will get good levels to invest in the next few weeks.
ET Now: The fall in some of the midcap stocks are looking fairly ominous and to be fair, the results have not been the most
encouraging. What do you do in a scenario like that?
Arvind Sethi: Our long­term view is that we are in a global deflationary environment. We also have a Central bank governor who is keeping money
tight and has a very clear target to bring inflation down to the 4­5% level in the next couple of years. It is not going to be easy because there are
structural issues, but that is what the objective is. We have a government which is going along with keeping the fiscal side under control. So a
slowdown in theeconomy should be expected and if we look at the background and try to look through a year, we are seeing the GDP back to 7­
8% type of growth. We are seeing inflation down to 4­5%, which means bond yields have a lot of room to come down as well. In that context, once
the economy and the cycle pick up, you will see companies begin to perform.
With respect to your question on midcaps, our sectoral allocations have been fairly consistent in the last few months and we are stuck with the
companies which we think have good term prospects. The midcaps are relatively illiquid in a bullish market. They tend to go up a lot in this sort of
market. A little bit of selling comes and they get trashed. So we are still looking to stick with the companies that we like in our portfolios and for us
this is an opportunity to add as the flows come in.
ET Now: It is fashionable to say that medium­term and long­term story of India is intact, but when you see 20% erosion or 30%
erosion in midcap stocks, that just forces you to ask one simple question. Where is the bull market and why are stocks correcting
20­30%, if we are in a bull market?
Arvind Sethi: You do get these corrections and then you have to see 20% on how much. Some stocks have gone up four and five times. So what
is the 20% correction? For traders, that is a very big concern and of course the NAVs of our portfolios get hurt when something like this happens.
But then you have to take the down with the up. When the market was at 9000, some of these stocks were a little too high simply because of the
illiquidity, but nothing has changed in their underlying business.
This is not for day traders. Equities have provided great returns. This market could correct even more, maybe something like 7500­7600 on
the Nifty gets tested. If it happens, that should be an opportunity for investors to keep investing according to the plans that their advisors have
provided them.
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