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Recovery in India is fairly stable

Recovery in India is fairly stable
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First Published: Thu, May 27 2010. 08 54 PM IST
Updated: Thu, May 27 2010. 08 54 PM IST
Mumbai: Markets worldwide have been hit by turbulence because of concerns of contagion from the European debt crisis. In an interaction with CNBC-TV18, the top brass at Citi Investment Research and Analysis, including Robert Buckland, managing director, global equity strategy; Geoffrey Dennis, managing director and global emerging markets strategist; and Aditya Narain, managing director and head of India research, spoke about where the markets are headed and the prospects for India. Edited excerpts:
Turbulent times, big global correction or more vicious?
Buckland: Our view is always that year two of a stock market recovery is very different to year one. In year one, share prices surge higher, as we saw in 2009. Our view on this year was that equities will grind higher in 2010, and that means we will be going forward, going back—three steps forward, three steps back, and I think we are two steps back at the moment. But we do think markets should be able to grind out decent returns by year-end and, therefore, we think there are some opportunities right now in global equities.
What is the emerging market picture looking like? Is there reason to be worried, or is there only a liquidity connection, not much more?
Dennis: It’s mainly a liquidity connection. There are parts of the emerging market world that are fairly tied in with Europe and, obviously, one of the big concerns right now is the sovereign-debt situation in parts of the euro area. But it still is the case that the fundamental story behind the emerging markets is better than it normally is at this stage of the economic cycle, better than it has been in the past, particularly in terms of economic growth and also in terms of fundamentals such as the fiscal deficit and debt comparisons with parts of the industrial world.
India has outperformed in a relatively small span of time. Do you see that continuing?
Narain: Our sense is India should do well in an absolute terms for two reasons; one on the micro side as Robert had mentioned, there is an economic recovery that is happening. I think in India’s case it is fairly sustained and stable. The second bit is, as far as India’s macro is concerned, it is turning for the positive from a pure domestic perspective.
How the global (situation) pans out, remains to be seen, and its influence on India remains to be seen, but at the basic domestic level, the recovery is robust and stable; at the macro level, things are turning for the positive. So in that sense India should do reasonably well.
cnbctv18@livemint.com
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First Published: Thu, May 27 2010. 08 54 PM IST