FUND VIEW - Tata wary of realty; bets on industrials, IT

By Nishant Kumar

MUMBAI (Reuters) - Tata Mutual Fund is overweight industrial capital goods firms in India on hopes a reviving economy will boost order books in the current quarter and the next, lifting corporate earnings, a fund manager said.

M Venugopal, head of equity, said he also favoured consumer goods and software exporters but was wary of real estate firms as asset prices remain unaffordable for a major chunk of population.

The fund manager has dumped almost his entire stake in the real estate sector in 2009 and invested nearly a third of its Tata Pure Equity Fund's assets in capital goods, technology and consumer sector shares at the end of October.

ITC, Bharat Heavy Electricals and Crompton Greaves were among the fund's top-10 holdings.

"We are set for some bit of ordering activity, which should pick up now," Venugopal told Reuters in an interview.

"Once you see that happening, you will see some upgrades in the infrastructure space," the fund manager, who manages more than 60 billion rupees ($1.3 billion) for the firm, said.

He said a pick up in industrial output was not a result of firms restocking inventory but a revival in economic activity. This should lead to a stronger corporate earnings growth in the third and fourth quarter of financial year ending March.

The fund manager is expecting at least a 5 percent corporate earnings growth in fiscal 2009/10 and up to 15 percent the next year, as the economy bounces back and investments pick up pace.