To get a sense of the prevailing market conditions and global risks surrounding the emerging markets, Bloomberg TV India spoke to Prabhat Awasthi, Managing Director and Head of Equities at Nomura India.

One of the questions that come up consistently is during interactions with investors globally is that of execution. The Centre’s priorities seem to be clear. But when will these actually roll out? This is what is on investors’ mind. Would you agree?

I think, compared to where the expectations in terms of growth recovery and the timing were earlier, there have obviously been some disappointments this year.

This is a lucky question we keep asking ourselves in terms of when we are actually going to see a much broader-base recovery and growth picking up to a higher level.

Our view on that has essentially been that the recovery will be gradual because a lot of new things are needed to fix the economy, and the fact that the economy had a natural path, which was on the way down when the new government came to power.

And I think that what we see now is the first phase of recovery, where we see some of the aggregates starting to grow in the economy.

For example, look at the commercial vehicles sale, the steel volume growth and the petroleum products sale.

The real indicators in the economy are starting to look up.

Obviously, there are global headwinds but even despite that, I think we are seeing a gradual recovery.

This recovery will be gradual and not a V-shaped recoveryWe will continue to get more and more sure-footed as we go forward in time.

What are the risks out there? Probably the markets also are taking cognizance of the outcome. Clearly there seems to be somewhat of a risk of trade that we are seeing when it comes to the emerging markets equities.

I think yes, you are absolutely right. There are risks out there and these are more global than local.

The market risks are obviously global because at the end of the day India is part of an emerging market and all emerging market funds have seen outflows.

Being an overweight, India will obviously see a sell-off. So, I feel that kind of a risk from the market prospective is there.

Secondly, global risks also come into the economy through global commodity prices, because, for example, if steel prices come down, the companies in that sector get affected.

So, this is a real economy risk that enters through a global slowdown. But from the country prospective, the global slowdown has not really been as negative for India, thanks to a much better balance of payment situation, which led to a better inflation situation.

While there are negative sides to global risks, there are obviously the positive sides from the overall macroeconomic prospective.

Finally, I would like to say that the risk comes in from the kind of expectation that markets have with respect to growth recovery versus what will actually be delivered; a gradual slow growth recovery.

If there is a mismatch between the two then obviously that is a market risk.

However, I think that has largely been played out in the last three to five months given the noises we are hearing from the market place, in terms of the slow pace of growth recovery.

Therefore, I think the risk largely at this point of time is global, and they are more market-specific than economy-specific.

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