With the Left parties as well as the Congress making statements that they will not divest profit-making public sector undertakings, the markets went for a free fall. There were also concerns that some of the economic reforms would get reversed. Stocks and equity funds kept falling, but a fund that depends on reforms for its investments would be the most affected. Wouldn't it?
For DSP Merrill Lynch Mutual Fund, the timing of its ongoing IPO for The Infrastructure Growth and Economic Reforms (TIGER) could surely have been better. This fund's charter is to invest in stocks that will benefit from the structural changes brought about by continuing liberalisation in economic policies by the government. Infrastructure growth, both by the public and private sector, is its second peg for investing.
The economic reforms part seems to have come under a cloud with the new government. But DSPML does not think that it will affect its plans for TIGER. S Naganath, Jt President & CIO, DSP Merrill Lynch Fund Managers, said he expected infrastructure investment to proceed as before. He added, "We are confident of the continuity of economic reforms. Don't forget that divestment is just one facet of economic reforms."
He believes that the statements and the manifestos do not rule out divestment. It is just that the process will become selective.
Naganath's final argument for the performance of his fund sounds logical. He says, "The market has already come down from 5,700-odd levels to the current 4,800 level (May 18). This obviously means that investors have reduced expectations. Anything positive from here is going to be an upside."