Mr. Pankaj Tibrewal
Sr. Vice President & Fund Manager (Equity)

Pankaj Tibrewal manages small, mid-cap and balanced equity funds at KMAMC, including Kotak Emerging Equity, Kotak Midcap and Kotak Balance Fund at KMAMC. Pankaj joined Kotak in 2010, and has also been involved with fund management across fixed income and equities for over a decade. Pankaj has previously worked with Principal Mutual Fund, where he managed schemes like Principal Emerging Bluechip, Principal Tax Saver and MIPs. Pankaj featured in the top 10 fund managers in India in 2016 as per Outlook Business. He ranked 8th in the ET Wealth-Morningstar's best equity fund manager rankings for 2016. A commerce graduate from St. Xavier's College, Kolkata, Pankaj holds a Master's degree in Finance from Manchester University. His hobbies include listening to Hindi music, travelling and reading.

Q. India Inc. will start declaring quarterly results in coming days. What are your expectations?

Answer: We believe that the qtrly results would be a mixed bag for corporate India during the 4QFY17.Certain sectors are still feeling the impact of demonization. The earnings growth for the 4th qtr would be driven by the low base of few cyclical like PSU Banks, Metals, Oil& gas etc. In our view Nifty earnings growth this quarter can be in the region of 9-11% similar to previous quarter. This quarter Technology & Pharma could report subdued earnings.

Q. The FY2016-17 was largely good for the domestic markets and the industry. How are the equity markets expected to perform this year?

Answer: After the strong run in FY17, we expect markets to take a pause and consolidate in the near term with some downside bias led by global factors. Valuations are in the fair value plus zone. However the trend line and direction from the medium term perspective is still positive. Definitely the market participants are cautious and prices of stocks are still not in a bubble zone. Markets still offer good bottom up stock picking opportunity. Assuming markets to be a 5 day test match in terms of cycle we are definitely not in the fifth day but on the 3rd day.

Q. There are increasing voices of protectionism and trade rebalancing by many developed countries, especially US. What impact do you feel it will have on India's economy in coming years?

Answer: While the general belief is that Protectionism and Trade Rebalancing is negative for India; we believe it is premature to make such a conclusion as there are a lot of moving parts in the Global economy today. For example, the Trans Pacific Partnership (TPP) agreement would have been a negative for Indian Textile companies as their competitors in Vietnam would have gotten a large free market to cater to. However the scrapping of TPP by US has come as a relief to Indian textile companies. Similarly while Brexit may be negative from a Global trade perspective, it has opened up the Potential for a UK India Free Trade Agreement. So the situation today is very fluid and it will take some time before one can arrive at a conclusion

Q. The Indian Rupee is has performed strongly in the recent quarter. What do you think are the main reasons for the same and at what levels do you feel that the Rupee will likely settle?

Answer: The current macro situation of India is excellent with low current account deficit, inflation under control, relatively strong GDP growth etc. This has helped attract flows both in form of record FDI and decent FII flows both in debt and equity markets which in turn has helped rupee to appreciate. Also Indian rupee shouldn’t be looked in isolation as most of the emerging market currencies since the start of this calendar year have appreciated against the USD. For eg: Mexican Peso: 12%, Russian Ruble: 9.3%, Taiwanese Dollar 6.3%, South Korean Won: 6%, Indian Rupee: 5.29%/

Q. What are your views on current market valuations especialy w.r.t. the large cap and mid cap space? What would you suggest for a person looking to invest fresh money at this time?

Answer: Over the last few years broader markets have done better than the Nifty/Sensex as mid-small caps have outperformed the large-caps. In the near term midcap-small cap valuations are higher than the historical averages. The advice to investors would be that have a right mix of funds (large cap, multicap & Mid-small caps) and diversify across market capitalization rather than having concentration towards one. Also at the current levels of the markets we would advise investors to do regular investments via SIP/STP and if market offers opportunity during correction one should do lumpsum investments.

Q. How do you see the earnings growth shaping up this year? According to you, which sectors will likely to outperform or underperform in near term?

Answer: We believe the earnings growth for Nifty could be in the region of 12-15%. The sectors likely to outperform are: Private Banks and Select NBFCs, Auto and Auto ancillaries, Capital Goods, Oil &gas, Cement etc and sectors likely to underperform can be IT & Pharma.

Q. What is the investment and cash strategy followed by your fund-house in present market scenario? Are you looking for new opportunities or are holding on to existing bets?

Answer: We as a philosophy don’t take cash calls and maximum cash we maintain is around 7% in a portfolio. The portfolio is always a combination of new ideas and existing bets. The portfolio churn across our funds is quite low which shows that we try to take long term bets.

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