MARKET OUTLOOK

Quarter I 2010

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 Market Outlook-Equity
Domestic growth drivers, a positive
We wish all our investors a very Happy New Year. 2009 was a kind year
for equity investors across the world and the significant push by central
banks to stave of a vortex of a slowdown pushing to deflation seems to
have worked.
Yet not all are convinced and there are lingering doubts as to whether we
have delayed the inevitable slowdown, and also as to who will pay the
bills. Spending today, using borrowings will eventually have fairly simple
consequences:
These are higher taxes or debt forgiveness either through devaluations or
through loss of principal or a combination. These problems will continue
to dog the developed nations, as their contingent commitments are far
greater than current revenue streams.
In Asia, there is comfort that fiscal prudence among individuals, companies
and governments are still there.
As we step into 2010, the key questions that we will have to ask ourselves
are:
1. Will recovery in Asia continue without the extra-ordinary stimulus
doled out by governments?
2. As all governments go out to repair their balance sheets either through
higher taxes or lower dole outs. Is there a risk of another slowdown
which could set us back by a few years
3. Will India’s high fiscal deficit hamper growth and how will the
government address the same?
4. What is our view on inflation?
5. How will India’s markets perform and which sectors do we like?
The Global Environment: The global environment is showing signs of
repair and consumer confidence. Capacity utilizations are also nudging
up. The central banks have been extremely liberal in treating toxic loans
and receivables and have in effect guaranteed risk taking to an extra-
ordinary degree. This has resulted in all governments in the developed
world borrowing large amounts while private citizens and companies
reduced their debt.
The fastest set to repair and come out of this problem has been the group
of large companies across the world that has raised cash and liquidity to a
historic level. They will soon need to deploy their cash into buybacks or
expansions/ acquisitions. This would set the base for equity valuations.
The signs of recovery have helped almost all stock markets to move up
simultaneously to 30% off their previous highs on a dollar basis.
Therefore, it may be reasonable to assume that this rally has been one
driven by liquidity, rather than fundamentals as almost all markets have
risen by similar amounts. Will this change in 2010, or will all markets
move up and down together?
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The second phenomenon that is going to test us in 2010 is the volatility in
dollar and commodity prices that veer from inflation to deflation. We do
not think that central banks will react to volatile commodity prices, but
there are increasing signs that incremental growth will have to come from
Asia, and as to whether that is adequate to support prices will have to be
seen.
In this fall, as developing countries were not cash strapped, the distress
selling in commodities did not take place, which may not have been
possible earlier; also large incremental fund flows into commodities have
helped stabilize prices. Hence, commodity prices are defying the
fundamental supply demand equation.
Also, there has been greater producer discipline ensuring price stability of
commodities, which in turn has reassured investors to park money as an
inflation hedge.
Our key concern is on 2011, when China’s infrastructure push slows down,
the core demand for commodities could decline, which could then
pressure prices. The simultaneous exit of investors and weak fundamentals
could cause a sharp fall in prices.
There are nascent signs of the Asian economy picking up and going ahead
as a region. Internal trade in Asia is picking up along with trade
agreements, through the region still needs to import oil and is an energy
deficit region.
Going ahead we think trade and investments within this region will
increase, as scope for growth in other economies is limited. With China
moving to a more internal consumption based economy, this may free up
space for Indian companies and other smaller countries to fill up the areas
that China gradually vacates.
Use of dollar as a trade settlement currency could also decline within the
region, and bartering or using local currencies to settle gaining ground.
This would promote growth as the need for hard currency diminishes.
Increasing consumption in Asia will remain a key theme in 2010 as well,
and we think India will also contribute. Consumers in India and China
are under-leveraged and are moving up the value chain as their per capita
GDP increases. To capture their aspirations will be key challenges to our
investment process.
We expect 2010 to surprise us on the upside as far as global trends are
concerned while there may be another leg down in 2011, as growth
weakens on the back of lower stimulus. We expect governments to keep
the stimulus tap running in 2010, to ensure that growth is back on track,
implying an extra-ordinary debt burden on these governments.
This could impair their growth over the medium to long term, and many
developed economies will be faced with large debt and declining
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 Market Outlook-Equity
demographics with rising pension and health care benefits.
Asia however, will present a very exciting opportunity as both China and
India will continue to grow at a healthy clip as personal consumption
increases. What is even more exciting is that consumers in both these
countries have a low level of personal debt and high savings.
How do we invest here: In our view, we believe that we need to be focused
on a few sectors and stocks where valuations are reasonable and growth
is fairly predictable rather than bet on the general market? Although there
has been a large inflow of money into Indian equity markets on back of
carry trades, we think that the previous level of volatility in the market will
not be there.
Foreign inflows into India in 2009 were close to 17 billion dollars, which
was a significant sum when compared to local investors. FDI inflows were
also increasing highlighting the importance of India as an alternate
manufacturing destination.
Asia, including India and China have been extremely cautious about the
slowdown and have promptly reduced taxes especially on consumer
durables and cars. In India, there has been a simultaneous reduction of
taxes – both import and income taxes and VAT which has helped demand
remain buoyant and indeed surprised us all on the upside.
A part of this demand growth has been on account of higher rural incomes
due to a sharp increase in prices of crops and the Sixth Pay Commission,
which covers Central Government employees.
Also, lower commodity prices implied margins of auto companies surged
to life time highs resulting in record profit growth. While margins may
regress towards mean, we expect volume outlook to remain buoyant.
Growth in India: We expect India to remain a large domestic growth story
with several drivers on account of the large unorganized market and lack
of reliable statistics. The index of industrial production is recovering as
also sales of commercial vehicles, power production and other segments.
We are also witnessing a trend of exports coming back on account of
higher labor costs in China and the demographic advantage that India has
to offer.
Apart from the consumption theme which is set to grow on the back of
higher incomes, we expect infrastructure to play out as well though there
may be delays from time to time across sector. Just as telecom was the
large growth industry during the last decade, we expect power and
ancillary sectors to be growth industries during the next decade.
India is also going to exploit its natural resources such as coal and natural
gas, which will reduce its external needs for energy.
So we think that all drivers of growth – consumption, investments and
exports will start contributing in a meaningful manner. In 2009, one of the
main drivers has been government consumption as has been the case else
where in the world. Will India withdraw the stimulus?
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Fiscal Deficit: India’s fiscal deficit is linked to commodity prices especially
oil, and a benign oil price is beneficial to our fiscal situation. We think
India’s fiscal deficit will be fairly acute this year i.e. FY2010, and can
considerably ease only in FY2012 or if oil prices fall sharply.
We expect the consolidated fiscal deficit to cross 10% in FY2010 and
could remain flat in FY2011 and then decline thereafter. There are,
however, downside risks to this estimate if the government does not spend
as much as it has planned.
So, it is our belief that in some aspects downside risks to the fiscal deficit
have not been fully appreciated by the market – both on the bond market
and equity market. How can there be downsides to our fiscal deficit in the
future?
Tax collections are also showing some signs of recovery, and while tax
collections were sluggish on account of the sharp rollbacks of customs,
excise and income tax rates, we think that India could benefit in FY2011
as volume growth surpasses expectations.
Also, we think tax rates may nudge up, or new avenues of tax found such
as export taxes. This could imply that India’s fiscal deficit may not look as
bad as the some of the pessimists paint.
Disinvestment will continue to be a recurring theme in 2010 and this can
absorb a significant amount of capital and this could cap market returns.
This process will increase the weights of PSU companies in the indices as
their free float increases.
Consequently, portfolio rebalancing may cause other stocks to
underperform as they get sold down. This phenomenon of broad markets
not going anywhere could lead to investor interest into mid and small caps
which typically turn frothy when the large caps are stagnant.
Fund Flows: India will need to invest 100 billion dollars annually for the
foreseeable future and hence funding will remain a key issue for some time
to come. We believe Indian companies will continue to raise considerable
amount of capital for the foreseeable future.
Further, disinvestment will also drive demand for capital from both
domestic and international investors. The retail investor has shown low
appetite towards equities and most of the incremental saving is moving to
fixed income products and bank deposits. So can India raise its capital?
We expect many developed countries to gradually reduce their debt levels
and turn net savers and this may actually increase inflows into developing
markets India will stand out as among the outstanding areas of capital
deployment, as it is still a supply starved economy, and large amounts of
capital can be put to work here.
Airlines and hotels are already reaching their peak capacity utilizations,
indicating that there is scope to invest in India and grow businesses. India’s
high savings rate will also support growth for the medium term.
We therefore think, that while India will continue to suffer from a high
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 Market Outlook-Equity
fiscal deficit for the next few years, the underlying commercial potential of
Indian companies will continue to attract capital from overseas investors.
Market Outlook: We remain cautious on markets in 2010 in the India
conext and are fairly confident of its performance in FY 2011 and beyond.
The reasons for this are:
• Inflation data will turn adverse in Q1CY2010, and this will raise some
panic in markets. This may or may not be accompanied with
government borrowings and could set about a correction. While there
may or may not be rate hikes, liquidity will continue to be easy and
borrowing costs will remain benign.
• Should growth be very strong in China, then commodity prices could
go up leading to sustained inflationary trend which could raise interest
rates and slowdown growth for some time.
• The base effect for many industrials and consumer durables would turn
challenging in H2 CY 2010 and this could cap market returns
• The consensus market (Sensex) earnings points to a 20% growth in
FY12, which is healthy. We think there may be, however, some
pressure in margins in some segments and this could reduce earnings.
A large portion of earnings comes from commodities and financials
which will be the key segments to watch for earnings growth.
• Valuations of Indian markets are not cheap by historic standards and
will need to be considered while making investment decisions. We
still believe, as always, that India will continue to be a stock specific
market based on execution rather than taking any sector calls per se
• We therefore think that it would be better to focus on tomorrow’s
winners rather than focus on the benchmark. We continue to believe
that there are opportunities in the infrastructure and utilities space. We
also believe that the mid cap and small cap segments of the market
will offer promising returns.
• Risks to the market include higher oil prices and runaway inflation and
fiscal deficit. This may not, however, impact the fortunes of companies
in a significant manner, as both companies and individuals are flush
with cash and saving. Hence, we believe that any panic or dip would
present a great opportunity to buy Indian markets.
• Should China’s material intensive growth cool off, and then we could
have a slump in our corporate earnings as well, as most of the earnings
growth is expected in commodities. This may, however, be beneficial
for the economy as a whole as inflation would be under check leading
to benefits.
• Yet another weak monsoon could hamper rural demand which has
provided growth in FY 2010 and stability for the consumption theme
• Although the political environment appears stable and conducive for
a multi year growth strategy, policy decisions are getting unduly
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delayed – sample for instance, 3G auctions and road projects. We
remain concerned on this front, and any delays could have a negative
bearing on the market trends.
Our convictions: We are optimistic on the infrastructure sector as we think
a confluence of forces will drive growth here: capital from countries which
have limited avenues of growth such as Japan, need for sustainable growth
driving policies, and changing aspirations of people both rural and urban
creating the demand environment.
We believe that there will be an increasing role for private operators in
infrastructure as the government is not able to cope both financially and on
an organization basis. Hence we expect a number of new avenues of
growth emerging over the next decade: reverse osmosis plants, garbage
disposal plants, sewage treatment plants, minor ports and bridges.
We think India is just about approaching the tipping point as regards
infrastructure in concerned and we may be actually compelled to expand
capacities faster than we build them out, be they airports and roads or
ports. We would go out on a limb and say that our infrastructure is far
from adequate, and we may be forced to build the infrastructure again as
they are far from international standards.
The second area of conviction would continue to be the Indian mid-cap
universe. While many large Indian companies are small by international
standards, the entrepreneurial spirit is best captured in the Indian mid-cap
universe. New companies, new businesses are best captured in this space,
be they parking lots, ports, malls, cinema theaters, hospitals and health
care
For sure, not all of them succeed, but then it is necessary for us to take this
risk for capturing the extraordinary growth opportunity in India.
We are also excited by the outsourcing opportunity in India. While this is
primarily driven by the IT/ ITES segment, we are beginning to see signs of
revival in exports from several industries including textiles, auto ancillaries,
pharmaceuticals and other chemicals.
We think that there will also be a number of strategic tie-ups/ acquisitions
in the future as Indian companies will offer a valuable manufacturing hub
and entry into a high growth market. These will be one time however.
Finally, we remain positive about the strength of our consumption/ and
services sector, where we think a lot of unorganized services get converted
into the organized segment will present us a large and interesting
opportunity be they coffee shops, or mid-priced hotels and airlines. We
remain bullish on the domestic consumption story and think that will play
out to be a multi year theme.
We continue to recommend investors to take a meaningful exposure to
Indian equities on the back of the above expectations. Market declines
should be viewed as an opportunity from a long-term perspective.
4 Sundaram BNP Paribas Asset Management
 Market Outlook-Fixed Income
Yields likely to rise in 2010
As we step into a new year and a new decade, we decided to check out
the view of our fixed-income fund managers – Ramkumar and Rahul Pal -
independently and did so. There were a few areas of disagreement, which
would be and should be the case for a healthy environment. These would
be ironed out, as is usually the case. Here we present, the views of the
fixed-income team on a range of issues that are relevant in the year ahead
and also look back at key developments of the past year and decade that
have influenced the structure and development of bond markets in India.
Let us head straight to the Q & A;
1 What are the key takeaways from 2009?
What is surprising is the benchmark 10-year yield rose by 230 bps (basis
points – a basis point is 0.01%) - the highest increase in the benchmark on
a calendar year basis in the past decade – and yet 2009 was the year of the
most benign inflation number (WPI Tracking)!!! Amen!!!
This almost wiped out the effect of decline in yield in 2008.
The 1-year G-Sec yields were quite stable with the Reserve Bank of India
keeping the rates quite steady throughout the year. There was also no
monetary action throughout subsequent to the last such move that
happened at the very beginning of the year. In contrast to the movement
in G-Secs, the corporate debt yields declined by about 30 bps thus
reducing the AAA corporate spread to 105 bps from 315 a year ago.
There were several positives for the debt markets
* A year marked by lowest average WPI inflation;
* Highest banking liquidity (as defined by banking surpluses with
RBI);
* A weak banking credit off-take; and
* A supporting global and domestic accommodative monetary policy
Outweighed against these aspects were
* A larger than expected fiscal deficit and subsequent GOI borrowing
program
* Higher food price inflation (affecting the markets in the latter half)
2 What are the key triggers to watch for 2010? Please provide a more
focussed view on the impact of those likely to materialise in H1
2010?
The usual bromides such as the level of fiscal deficit as a percentage of
GDP as announced in Budget, credit off take and domestic & global
monetary policy will need to be watched closely.
The monetary policy in late Jan 2010 and the budget in February 2010
would set the tone for the direction of rates.
We expect a gradual upward movement in the CRR from the current levels
of 5 % to about 7 % by the end of the year. We expect that 150 bps of the
200 bps envisaged increase to happen in the first half. We also expect 75
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bps hike in the repo rate taking it to 5.5 % in the first half of 2010, with the
potential of a further 50 bps increase subsequently.
We also expect the spread between the repo and the reverse repo rates to
be maintained at the present 150 bps levels.
On fiscal deficit numbers: the GOI will definitely announce a lower fiscal
deficit compared to last fiscal year, yet deficit in the range of 5-5.5% of the
GDP (last year 6.8%) would continue to remain a concern for the fixed-
income securities markets, and if credit off take increases, markets would
continue to remain under stress.
3 How do you expect the G-Sec yield to trend through next year?
G-Sec yield is expected to trend upward, albeit gradually with support
coming in at every level. Yields are not expected to cross 8.5 % in 2010,
and will largely trade in the 8-8.25 % range.
4 What is your take on likely government fund raises and its impact
on bond yields?
The impact on bond yields due to higher fiscal deficit is more significant
than any monetary actions. It is quite difficult to explain such high fiscal
deficit in a year when the GDP is projected to grow at more than 8 %.
5 Do you expect the RBI to be in line with its track record of delivering
pre-emptive strikes a la 2004-2008?
I would expect the RBI this year to improve upon the structure of the debt
capital markets. The RBI would rather wait for core inflation to increase for
pre-emptive strikes.
Markets may be ahead of the curve. In 2004 before RBI made its first move
to raise rates the G-Secs 10 year yield had already moved up by 170 bps.
After 6 hikes of 25 bps each and increases in the reverse and repo rates
spread up to 300 bps from 150 bps, G-Sec yields only by about 100-110
bps over the next four years.
6 Do you expect the RBI to push on CRR hikes more in order to leave
increases in policy rates at more modest levels? What would be the
implications?
Yes. It is more justifiable to do so. CRR hikes in combination with MSS
would be likely, but the RBI would try to ensure adequate liquidity for
meeting credit and GOI borrowing. The impact is likely to be mostly on
the shorter-tenor of the yield curve; the longer end would remain insulated
from great spikes
Even last year, the medium-term and long-term lending rates in the
economy have not followed the swift movement in the secondary market
government security rates. In that sense, the Government has become the
relatively bigger beneficiary post the financial crisis and the monetary
actions of RBI. Hence the need to reign in liquidity is greater than pushing
the rates higher through monetary actions.
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 Market Outlook-Fixed Income
7 Where do the see the INR going in the next year, with a focus on H1
2009? What would be the implications of a comeback of MSS?
We expect the INR to appreciate against the US dollar. The trend set in
2009 is expected to continue in 2010, too, with the scope for the US
recovery still remaining doubtful in the first half of 2009. It has a potential
a move to a range of Rs.44 to Rs.45 to a US dollar, which is the average of
the last 7-10 years.
MSS comeback is as inevitable as a CRR rate is. As the intention of MSS
is neutralise the impact of US dollar inflow and currency interventions, it
is not likely to have a significant impact in the market place, if done in a
gradual and purposeful way.
8 Should China decide to allow an appreciation of its currency – say
5-10% - what would be the trend, given that INR is already gained
versus the $ even as the renmimbi has remained stable?
As the trade relations of China vis-à-vis US is far different that what we
have with US, there is not likely to be direct correlation leading to similar
appreciation in our currency.
Further, as the USD and INR conversion is largely market determined, the
need for catching up with the fundamentals is not there in the INR though
it is the case with the renmimbi, which is linked to USD.
Correlation between renmimbi/USD trends and the USDINR has been
weak in the instances of revaluation in the past.
9 What are the likely consequences of these forex-market trends for
bond market yields?
Appreciating USD/INR- might force the RBI to press ahead with MSS with
consequent impact on short-term yields.
The potential for the INR to appreciate keeps interest in the bond markets
alive for foreign players. We have, however, seen in the past that such a
view on the currency has not generated abnormal FII interest in bond
markets. Their investments in Indian bonds in India are gradual. We
expect similar trends to continue.
10 Do you see the government enhancing the limits available for FIIs to
invest in Indian bonds?
Yes, especially considering the need to bring in more capital into the
country.
11 What are the systemic changes (hard & soft) that are likely in 2010
and what would they mean for investing in bond markets?
The bond markets are likely to be an evolving and happening space in
2010. The system support worked on through regulation is likely to
bolster the markets and provide greater transparency and confidence to all
participants. A few key moves are:
Guidelines on issue of Short Term Non Convertible Debentures: Draft
issued and feed back taken by the RBI and Final guidelines are expected
any time soon.
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Clearing and settlement of trades in corporate bonds through clearing
corporations: Most of the active participants, especially regulated by RBI
and SEBI have already signed agreements with Clearing Corporations and
are settling the deals through Clearing Corporations, thus eliminating
counter party risk. The IRDA regulated participants and Provident Funds
are slowly getting in to the system.
Securitization of Loan pools: The recent changes on compulsory
participation by the originator and minimum seasoning of 12 months have
brought in considerable discipline in this market. Markets have turned
sluggish due to this, as expected. These are, however, welcome moves to
ensure credit discipline in originators and investors.
Repo of Corporate Bonds: The draft guidelines have been issued on this
much prolonged and awaited regulation. RBI is waiting for the clearing
settlements to stabilize. We expect regulation to be in place before March
2010.
• An intent to develop screen based trading in corporate bond
market…a la NDS-OM
• Introduction of Credit Derivatives (CDs) market-start with
exchange-traded CDs
• Introduction of more products in the interest rate futures market
12 How has the market in interest-rate futures evolved and where do
see it going in the year ahead?
Interest rate futures have been introduced, but have not evolved yet. The
main concern of the participants appears to be uncertainty on the security
that may get compulsorily delivered on the outstanding contracts.
The initially generated interest has died down and the product needs some
reworking:
• Move to a pure cash-based delivery mechanism
• Introduction of more products-3 month/6 month/1 year tenor
interest rate future products and possibly a 20-year product
• Some handholding is initially required. So the RBI should involve
Primary Dealers as market makers.
• Move towards democratising the product: for example, if housing
finance companies have tie-ups for home insurance then why not
design/offer interest rate future products for home loan seekers to
hedge against possible rate movements.
Recently, the NSE has tied up with a few large institutions to provide market
to the delivered security. More time may be needed for clarity and
confidence to ensure active participation in the future.
13 What would be the major India-specific events relevant to bonds
markets that would surprise you positively? Please explain with
implications?
• The repo on the corporate bond markets appears to have
limitations in terms of the securities covered. An enlargement to
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 Market Outlook-Fixed Income
include certificate of deposits issued by commercial banks, if
covered, should completely change the way participants are
looking at markets. It is a much simpler security to be covered
under repo. The size of outstanding issuances on CDs are more
than Rs.1 lakh crore at most of the time, and hence such a move
can deepen the bond markets immensely.
• The possibility of funding the GOI borrowing by issuing sovereign
debt abroad is another. Implications are emergence of an
alternative source of borrowing and that pricing discovery of
sovereign debt may possibly help companies have easier access
to credit
14 What would be the major India-specific events relevant to bonds
markets that would surprise you negatively? Please explain with
implications?
• Any moves to increase Hold-To-Maturity (HTM) component of
banks or restriction on investment by commercial banks into
mutual funds.
• The introduction of some sort of tax on foreign flows, will have a
greater impact on the equity/forex market but Bond markets may
end up taking the collateral hit!!
15 Do you expect any tax changes that could have a bearing on the bond
market?
If bonds/credit instruments are brought on par with equity as far as capital
gain structure is concerned, it will possibly have a far reaching impact on
retail participation in corporate bond market
16 Are corporate spreads likely to widen?
We think corporate spreads are more likely to trade in the same range with
a marginally widening bias.
17 Looking back, where is the bond market today as compared to the
turn of the decade just gone by?
• Mutual funds were a non-existent or a non-entity earlier in the debt
market. They are the most active players today in the short-term
segment, commanding almost 80-90 % of day’s volumes. They
are also active in the corporate debt segment
• The evolution of private insurance companies and their unit
schemes have ensured that they are quite active to satisfy the short-
term asset class requirements of their investors.
• Physical delivery of securities has become a thing of the past.
Dematerlisation has been the best thing that has happened to the
securities industry in India.
• G-Sec markets have undergone a gradual, stable and dramatic
change since the 1992 scam involving physical entries in a ledger.
It has become an example for other markets to emulate, especially
for institutional deals.
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• Better co-ordination among regulators, associate bodies,
custodians and participants is resulting in healthy overall
development of the bond market.
• Sensitivity of both the banking and the capital market regulator to
create more vibrant bond markets.
• Swift action in crisis situations such as in September 2008 by the
RBI for mutual funds and NBFCs is also notable.
• There have been a few improvements in the GOI securities
secondary market. Introduction of NDS-OM as an online trading
platform has led to a better discovery of GOI securities pricing and
also helped in easier settlement processes for transactions. The
structural nature of the GOI securities market has not, however,
changed much vis-à-vis pricing discovery on all tenors of the term
structure. Still today (like in the grand old days of voice
market/physical settlement) the most liquid securities in the
secondary market continue to be the benchmark securities. Thus
trading is still concentrated on a few benchmark securities.
• The overnight cash market has become less volatile. Measures such
as making call money a pure inter-bank market, introduction of
repo/reverse repo facilities under LAF, and CBLO as another
product in the overnight market, have given more depth to the
market
• In corporate bonds, the biggest change has been the serious intent
of the regulators to create a deep/robust/healthy debt capital market
for corporate bonds and that is the single most important change.
18 With interest rates in the Anglo-Saxon world likely to stay low for
extended periods, there is a possibility of smart money chasing bonds
in India. In this context, do you think the RBI should enhance limits
for FIIs?
Yes, as a structural measure. But surely we should not enhance the limits
just because rates globally are likely to remain low!!
The RBI should enhance limits gradually, as has been done in the past.
19 No category of the bond market appears appealing. In this backdrop,
what do investors do for the fixed-income component of the
portfolio?
Investing in fixed-income asset class is an attribute of a portfolio allocation
strategy of risk diversification.
At various points of time, different types of bond products become
appealing. The cycles have turned shorter, and hence may force investors
to churn portfolios faster within various bond segments.
20 What is your approach to investing in fixed-income asset class for
your own portfolio?
Investment horizon and risk absorption are the two essential features one
should adhere to while investing in fixed income.
7 Sundaram BNP Paribas Asset Management
 Fund Managers
Satish Ramanathan, a CFA Charter Holder, is the Head-Equities. He is a graduate from IIT-
Madras who has specialised in Finance & MIS in his MBA. He has extensive experience in
the asset management business with stints in Research division of Sundaram AMC and
managing funds for Franklin Templeton. He has been involved in equity research for more
than a decade and brings expertise in tracking several key sectors in the Indian economy.
Satish Ramanathan manages Select Mid Cap, Tax Saver, Select Small Cap, Equity Multiplier,
Entertainment Opportunities and the equity portfolio of the Balanced Fund and Monthly
Income Plan.

K. Ramkumar is the Head-Fixed Income. He is a science graduate from Madras University and
a Cost Accountant. He is a Certified Associate of Indian Institute of Bankers and has done
Diploma in Business Finance from the ICFAI, Hyderabad. He has over 15 years experience
in the Mutual Fund Industry. His prior experience includes 12 years with UTI Mutual Fund
and 4 years with SBI Funds Management.
Ramkumar manages Bond Saver and the fixed-income portion of Monthly Income Plan.
He is also the Co-Fund Manager for Ultra Short-Term Fund, Flexible Fund – Short-Term
Plan, Flexible Fund – Flexible Income Plan & Fixed Term Plans.

Srividhya Rajesh, a CFA Charter S Krishnakumar is an engineer from

Holder, focuses on the equity REC (now National Institute of
markets. She is also a management
Technology), Trichy, he did an MBA
graduate from BITS Pilani and has
from LIBA, Chennai. He has worked
done specialized courses in equity
research and financial applications for 18 years of which the latest eleven
from ICFAI, Hyderabad. She has years relate to the equity markets.
been with us from the time the fund Before joining our fund house, he was
house started operations in 1996. A two-year stint at the
Vice President (Research) at Anush Shares & Securities.
broking arm Kotak Mahindra opened a window to the
equity markets. Krishnakumar is the Fund Manager for the S.M.I.L.E Fund
Srividhya Rajesh manages Select Focus and Capex and Energy Opportunities
Opportunities.

Rahul Pal focuses on the fixed- J Venkatesan, a Cost Accountant and

income space. He is a Chartered a Post-Graduate in Commerce, has
Accountant. A three-year stint at IDBI an experience of more than two
Treasury provided an apt learning decades in the banking and asset
ground on the intricacies of fixed- management businesses. A seven-
income market. Rahul then joined year stint at Canara Bank was
followed by a shift to the asset
Sundaram BNP Paribas Asset
management industry through
Management with an active role in
Canbank Mutual Fund. With a rich
fund management. experience of close to ten years in fund management, he
Rahul Pal manages Money Fund and the fixed income joined Sundaram BNP Paribas Asset Management in
portfolio of our Balanced Fund. He is also the Co-Fund January 2006.
Manager for Ultra Short-Term Fund, Flexible Fund – Venkatesan is the Fund Manager for the Rural India Fund,
Short-Term Plan, Flexible Fund – Flexible Income Plan & Growth Fund, India Leadership Fund and Financial
Fixed Term Plans. Services Opportunities

S Bharath is the dedicated fund manager for investments in overseas securities

Mutual Fund Investments are subject to market risks. Please read the Statement of Additional Information and Scheme Information Document carefully before investing.
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a prospectus or offer document or an offer or solicitation to buy any securities or other investment. Information and opinion contained in this document are published for the assistance of the recipient only; they are not to be relied upon as authoritative or taken
as a substitution for exercise of judgment by any recipient. They are subject to change without any notice and not intended to provide the sole basis of any evaluation of the instrument discussed or offer to buy. It is neither a solicitation to sell nor shall it form the
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any of the data presented in this document for its decision-making purpose and is not bound to disclose the same. Copies of the offer document and application form with key information memorandum may be obtained from the offices of Sundaram BNP Paribas
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Service Centres, Statutory details: Sundaram BNP Paribas Mutual Fund has been set up as a trust under the Indian Trusts Act, 1882 Sponsors: Sundaram Finance Limited & BNP Paribas Asset Management. Investment Manager: Sundaram BNP Paribas Asset
Management Company Limited. Trustee: Sundaram BNP Paribas Trustee Company Limited. The sponsors are not responsible or liable for any loss beyond the contribution of Rs.1 lakh to set up the Mutual Fund.

www.sundarambnpparibas.in 8 Sundaram BNP Paribas Asset Management