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Sharekhan shows how a small Indian fund can reap big returns

Published in Automated Trader Magazine Issue 26 Q3 2012

In this edition of Automated Trader's regular look at smaller players in the automated trading space, Andy Webb talks to Rohit Srivastava in Mumbai, whose firm Sharekhan Limited is the only long-short fund in India. The firm's trend-following tactics have helped it generate a return of 146 percent for the $20 million under management during the six years from early 2006.

Rohit Srivastava

Rohit Srivastava

Rohit has written of how the first time he set his eyes on price movements in the markets, identifying trends became a passion. Here he tells Andy how he and Sharekhan have put that passion into practice.

Andy Webb: Let's start with a little bit about Sharekhan Limited and how it's organised.

Rohit Srivastava: It's a public limited company and it's a stock-broking company, but it's registered with SEBI which is similar to the SEC. We take funds from clients and execute them on different portfolios.

Andy Webb: Which index futures are you actually trading?

Rohit Srivastava: We're trading the Indian index called the Nifty Futures. I do it in another product, which is called Trailing Stops, which is not automated, but it's again managed futures where we trade stock futures.

Andy Webb: So with the automated one trading the Nifty, you're going long and short - and you say yours is the only such fund in India?

Rohit Srivastava: That's right, in India essentially nobody has gone ahead and launched absolute return products or long-short products where you go long and short on the market. We don't even have inverse ETFs or any such products. The only ETFs are in gold and the Nifty - they are on the long side, called Nifty BeES and Gold BeES, which are right now being traded. So India's a very nascent market when it comes to alternative investments. It was my thought that you would have more a secular kind of market ahead and that we needed such products. But because Indians are still not aware of such products, they're not used to investing in them. So we have two categories of people: one is the speculators, who want leverage and therefore feel that they don't want to be in a product which is not trading leveraged; and second there are investors who are used to long only or buy and hold products. For that reason the fund has not grown. We've been marketing it and getting a few clients every month, but it's not really exploded despite the returns.

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