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INDIA IS A GOOD LONG TERM
STUCTURAL STORY FOR FII’S
The Reserve Bank of India (RBI) surprised the markets by hiking
key policy rates. What is your view on the RBI monetary po...
The US Federal Reserve has put tapering of asset-buying
programme on hold, giving relief to emerging markets including
Ind...
Foreign investors have bought equities worth over Rs 11,000 crore
in September. Given the current macro-economic situation...
Indian markets have witnessed only a handful of stocks rallying s
substantially in 2013. Do you think foreign investors ar...
The Indian economy is in a muddle, whom do you blame for the
current situation?
• There are many factors responsible for t...
Do you think there is a risk of sovereign debt crisis in India?
• We think the risk is minimal in the near term. While our...
Market outlook for the forthcoming year? Do you think there is
more volatility stored ahead for the markets?
• If you cons...
The government's efforts to draw domestic savings into equities
through the Rajiv Gandhi equity scheme have not been very
...
You are overweight on some sectors. What is the rationale behind
it?
• We like export-facing sectors like technology, phar...
THANK YOU
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India is a good long term stuctural story

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India is a good long term stuctural story

  1. 1. INDIA IS A GOOD LONG TERM STUCTURAL STORY FOR FII’S
  2. 2. The Reserve Bank of India (RBI) surprised the markets by hiking key policy rates. What is your view on the RBI monetary policy?  Reduced the marginal standing facility rate by 75 bps to 9.5% from 10.25%  Efforts towards monetary easing as growth continues to weaken on industrial activity and services.  RBI will have to revert swiftly towards a more aggressive easy monetary policy to be able to support growth.
  3. 3. The US Federal Reserve has put tapering of asset-buying programme on hold, giving relief to emerging markets including India. Will this help FIIs to invest more in the stock market?  The Fed's decision to keep policy loose  A lot depends on how the domestic situation pans out - if India is able to improve the policy framework and build an investor-friendly environment then we can definitely attract flows into equities.
  4. 4. Foreign investors have bought equities worth over Rs 11,000 crore in September. Given the current macro-economic situation, are you surprised by the foreign fund flows into India? • ICICI Prudential Asset Management runs an international business franchise through its offshore advisory division, which advises India only funds and segregated mandates for clients domiciled in jurisdictions spanning Europe, Japan, Middle East, Taiwan and Singapore. • Based on our recent interactions in the US, we find that there are a large number of value investors in US who are interested to invest in India at a time when currency and valuations are attractive.
  5. 5. Indian markets have witnessed only a handful of stocks rallying s substantially in 2013. Do you think foreign investors are interested only in few stocks? • FIIs definitely seem to favour a small set of stocks. This may be due to various reasons like the liquidity they offer, their presence in benchmarks, which is vital for Exchange Traded Funds, strength of the business models, etc. However, we see this trend as beneficial for Indian investors who have invested in funds that follow value philosophy.
  6. 6. The Indian economy is in a muddle, whom do you blame for the current situation? • There are many factors responsible for this; broadly, they can be classified into internal and external. Internal factors include quality of policy- making, higher than required fiscal and monetary stimulus in 2010-11 which pushed up inflation and CAD, unfriendly tax policies and inability to rationalize subsidies quickly enough. On the external front, the primary issues have been that globally growth has been tepid and oil prices have remained stubbornly high.
  7. 7. Do you think there is a risk of sovereign debt crisis in India? • We think the risk is minimal in the near term. While our current account deficit is high and our international investment position has deteriorated over the last 2-3 years, our balance sheet variables are quite healthy; these include debt/GDP, amount of foreign reserves, proportion of external debt, etc. However, in the long term, if we mismanage our twin deficits and are unable to increase growth, risks do exist.
  8. 8. Market outlook for the forthcoming year? Do you think there is more volatility stored ahead for the markets? • If you consider the immediate term, besides the uncertainty of elections, we have the world's most powerful nation proposing to unwind its easy monetary policy which will make the cost of capital expensive. The situation is a perfect recipe for volatility. • If you consider the immediate term, besides the uncertainty of elections, we have the world's most powerful nation proposing to unwind its easy monetary policy which will make the cost of capital expensive. The situation is a perfect recipe for volatility.
  9. 9. The government's efforts to draw domestic savings into equities through the Rajiv Gandhi equity scheme have not been very successful. What could be the reason? • Investors will require more incentives since the faith of investing in equity as an asset class has taken a considerable hit. It is extremely important for a country like India to have an equity market where local flows play a bigger role. In my opinion, tax incentives do help but from a long-term perspective, we need to create an environment which promotes an 'equity cult'.
  10. 10. You are overweight on some sectors. What is the rationale behind it? • We like export-facing sectors like technology, pharmaceuticals etc as we believe that if India has to reach a sustainable position on current account deficit, it has to encourage exports. We are overweight on telecom because we believe that the industry consolidation story is playing out and we should see industry margins improving. We also like regulated utilities and some PSUs as the valuations are really cheap.
  11. 11. THANK YOU

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