Krishna Sanghavi, Head of Equities, Kotak Mutual Fund talks to Priya Kansara Pandya on the new takeover code and share his outlook on the various sectors.

Many market experts are worried about SEBI's new takeover code. What is your take on the same?

We believe that the recommendations of the proposed takeover code are investor friendly and provide an equal treatment to all shareholders. It gives all the shareholders an opportunity to participate in the open offer in equitable manner.

Exports have jumped 30 per cent in June year on year and are positive for eight consecutive quarters. On the other hand, we talk of global slowdown. Where are all the goods going?

The exports growth is across the geographies, south-east Asia, middle-east Asia as well as the western countries.

The global slowdown has necessitated increasing need for outsourcing of goods from lower cost destinations like India. It has opened up new areas of export opportunities. Also, we should not ignore the Indian skill sets in producing quality goods, comparable with the global standards.

What do you think of the Q1 results so far? Any negative surprises?

Q1 results declared so far have been mainly from large cap companies and are quite good and generally in line with expectations.

Banking sector results have been robust. But what is the outlook going ahead given the high inflation scenario?

Yes, the sector's performance in Q1 has been robust. There has been improvement in operational parameters like credit growth, net interest margins and net interest income and improving asset quality (a result of growing economy).

Going ahead, the earnings visibility continues to remain good. High inflation prevailing currently will not impact the sector for long much as the inflation is estimated to come off from the current double digit figure to around 7 per cent by March 2011.

Nobody talks about the realty sector in their strategy as that also comes under domestic consumption and is a huge employment driver. Don't you think the sector discounts most of the negatives?

We think that sector can continue to remain underweight position in portfolios for some more time. Real estate prices have gone up and started impacting volumes for real estate players.

Also, with expectations of rising interest rates, the sector can have more negative impact. The valuations too are fully priced and there is a reasonable pipeline of fresh issuance by unlisted companies that too will put some pressure on listed stocks in the sector.

Monsoons till date are 14 per cent below normal but the met department is still quite upbeat about this year's monsoon season. Are you worried?

While the monsoon is running lower than the forecast, one needs to also check the distribution of rainfall across in various states.

We will be worried if the current rainfall trend continues for next two weeks as a poor monsoon can have a negative impact on rural consumption and inflation from agri commodities.