Like India; may increase exposure to quality stocks
Geoff Lewis, Global Strategist-Capital Markets Group at Manulife Asset Management
Feb 25, 2016 | Source: Business Standard
• While global markets are likely to remain choppy, Indian equity market looks attractive at these levels. India will benefit more from falling commodity prices and strong domestic growth.
• Tax treatment & FIIs: I have not picked it up as a particularly new issue. That has been a long running battle between FIIs and the Indian authority. Sometimes we have seen difference of views between the taxation ministry and other parts of government. So, that certainly has been a factor which has, at sometimes, hurt relations between foreign investors, but I do not think it has been a major driving factor in terms of the attractiveness of the Indian stock market. So, I do not think it is particularly at the fore in terms of being a major factor behind India’s current underperformance.
• Has India now fallen enough to be attractive to you? The fact that has been undermining investor confidence, there are real concerns over US recession, there is concern over China hard-landing, there is concern over oil, there is a weak demand. On all those three factors, we are pretty positive that there will be no US recession, no hard landing and that oil is mostly in the short-term about supply rather than demand. Markets will continue choppy however. The big worry for us is that we are not seeing signs of any improvement in earnings. There seems to be general deterioration, disappointment in most regions and therefore, markets will continue choppy. And the technicals are not pointing to any early rebound. At these levels, India is looking attractive. It has come off more, and it is a market we like. We are neutral in our global and regional portfolios at the moment, but we will be looking to add good quality large-caps at better valuations..