Head-Fixed Income, Religare Invesco Asset Management
As on January 19th, 2014
Sujoy has over 17 years’ experience in the Fixed Income market. In his last assignment, Sujoy was Head - Fixed Income with Bharti AXA Mutual Fund. Prior to Bharti AXA, he was with DSP Merrill Lynch Mutual Fund as Fund Manager, managing several fixed income funds. Sujoy has also worked with Bank of Punjab as a trader and traded in government securities, corporate bonds etc.and was a senior member of their treasury function. In May 2005 & April 2012 , he was featured amongst the top debt fund managers in the country, in the "Top Fund Managers of India" survey conducted by Business Today and Mutualfundsindia.com. Sujoy graduated as a Bachelor in Science (Economics) from University of Calcutta. He also holds a Post Graduate Diploma in Business Administration with specialization in Finance & International Business from Hindu Institute of Management.
What is your assessment on current state of the debt market?
The parameters affecting fixed income market has improved over time. The market appears to be in a sweet spot. With the decline in domestic inflation and moderation of inflationary expectations, along with improvement in the CAD and governments resolve in attaining the fiscal deficit target of 4.1% has strengthened the markets positive sentiment and the borrowers have been able to borrow at a finer cost. The improvement of credit markets, along with drop in the borrowing cost and credit spreads has improved the credit markets as well. The market is expected to continue on this path of declining rates, supported by moderation in inflation due to both domestic and offshore factors. The drop in crude oil prices has brought about windfall gains in terms of moderation in inflation and improvement of fiscal for the government. The multi-year low oil prices is expected to maintain the moderation in inflation supported by the changes in the APMC act which is supportive of moderation in food prices.
What are your expectations on interest rates?
Last 1 year saw an approx. decline of 100bps. Next 6-18months we expect a measured decline of yields with the reduction in the repo rates. The yield decline should be in line with the repo rate reductions. The shift of benefits from producers to consumers due to lower oil prices globally, will continue to maintain a benign imported inflation for India. The moderation in the MSP hikes and a part amendment to the APMC act of keeping the fruits and vegetables out of the ambit has had a moderation in the domestic inflation. Both the above reasons is expected to maintain lower inflation for India in the foreseeable future.
There is attractive interest rate differential between India and some advanced economies. What do you think about FIIs investments in debt market?
The interest rate differential between India and US presently around 580bps is close to the highs of 600bps. This attractive differential is expected to attract substantial foreign inflows into Indian debt market. The FIIs investment in corporate bonds is expected to continue more so due to absence of any limits for gilt investments. The government is expected to increase the limits for gilt investments over time.
Globally, volatility has increased. How do you think Indian Rupee will behave in calendar year 2015? How it will affect interest rates in India?
The volatility of Indian currency and rates have declined ever since improvement of macro fundamentals which has led to the emergence of a secular trend. The Indian rupee is expected to exhibit stability over 2015. The differential inflation between India and US is contracting over time. The contraction will result in significant moderation in the depreciation of the Indian rupee. The momentum of inflows might also deliver short periods of currency appreciation too.
10 year benchmark yield remained in a range for last some days. Where do think 10 year benchmark will settle by 2015 year end?
The 10 year benchmark will closely track the repo rate and move with it. The repo rate can decline progressively with the decline in CPI inflation. RBI is also expected to move towards a 1% real rate over the CPI and the 10 year benchmark is expected to closely snug the repo rate decline. Depending on the markets expectations, the 10year yield can also briefly drop below the repo rate if the rate reduction expectation draws closer.
There are no of mutual funds have launched credit opportunities funds. What factors investors should consider before investing into these funds?
The investors should look to participate in the credit expansion and growth of the Indian economy across various sectors while investing in the credit funds. The credit funds are exposed to the credit risk along with interest rate risks. With possibilities of economic growth improving over time the credit markets are expected to open up and expect more upgrades to downgrades. The risk return matrix is tilted towards investment in credit funds at a juncture of rate decline along with economic expansion and improved balance sheets for corporates.
Please give some insight on your investment process.
Our fixed income investment philosophy is based on generating a steady stream of market related income for the investors. It revolves around optimizing risk adjusted returns by providing for safety of capital, liquidity of funds, and investment income, in that order while adding value by managing the interest rate risk across various duration buckets and instruments by active asset allocation and a well-diversified portfolio positioning.
The investment team follows a disciplined research oriented investment process to meet Fund specific investment objectives on a long-term investment horizon. The fund manager strives for outperforming benchmarks by taking superior credit based on the in-house analytical credit research and interest rate direction calls without compromising on the liquidity risk. Interest rate direction call and anticipation of yield curve movement forms the basis of portfolio positioning in duration terms. Horizon Period Return analysis forms the basis for choosing between sovereign and credit.