Underweight on banking & financials: Principal Mutual Fund

Is the entire banking and infrastructure space still part of that portfolio?

Rajat Jain: Yes, very much. We have been underweight banking for the last 6 odd months now, 7 months since the second half pretty much second half of last year because we did see margin compression. We saw deposit rates going up and so no, but that is played out. I would not say it is fully played out, but substantial amount. We have seen deposit rate hikes come in, the stocks have underperformed in the recent past, so I think at this point of time looks attractive. Once again the financials, we have been quite underweight.

What about infrastructure, ahead of the budget would you at least take a trading bet on any of these stocks?

Rajat Jain: There are all kind of companies in infrastructure, you have asset owners, you have cash contractors and so on and so forth. We have been slightly conservative on this space because the margin compression has been so tremendous even on cash contractors, for example you are seeing so much of competition, be it roads, be if power transmission project and so on.

The compression margin has been quite substantial. So we have been underweight there. In terms of asset owners selectively we do have a few asset owners in our portfolio, but right now we are just sticking to our position and see how the budget unfolds. It is not the question of the budget as such it is more a question of execution on the ground. Execution picks up certainly we will be predisposed to that, but as of now we are not doing much in that space.