SBI Funds upbeat on infra; wary of IT

The fund unit of State Bank of India is betting on domestic infrastructure stocks but is wary of software exporters as a lingering global economic slump continues to blur sector outlook, a fund manager said. The firm also favours commodities and has beefed up stakes in financials and defensives such as utilities, drug and consumers. However, infrastructure remains the top bet as the success of the India story depends on how fast and efficiently the country fixes its creaky roads, ports and bridges, said Jayesh Shroff, who manages about $1 billion in equities at SBI Funds Management. "It is a tactical idea on top of a very strong macro, that without infrastructure there is no India story," Shroff said. "I think a lot of effort from the government and the private sector is going towards building a better infrastructure. That ultimately will lead to a sustainable high growth economy," the Mumbai-based executive told Reuters in an interview. "We are overweight overall infrastructure space," said the fund manager whose firm raised exposure to companies such as Bharat Heavy Electricals, Crompton Greaves and Larsen & Toubro in March. Shroff said high beta infrastructure stocks had paid off well for his funds during the recent market surge, with capital goods index rising by more than a third in the last one month as against a 22 percent rise in the main stock index. "This market will throw up a lot of opportunities," he said but cautioned investors to be selective because many firms had high leverage and foreign exchange exposure. "Within that we need to take company-by-company view but I think underlying theme in infra is very, very strong," he said.