Despite Rexit, Brexit and delayed/deficit monsoons, Indian markets gained 3 per cent last week and foreign institutional investors (FIIs) net invested ₹3,700-odd crore in June and over ₹1,200 crore in July.

This positive outlook about India is likely to continue and FIIs are likely to pump in $30-35 billion in FY17, according to Rashesh Shah, Chairman & CEO, Edelweiss Group.

Speaking on the sidelines of a press conference here, Shah said, based on his interactions with corporates, India is showing early signs of recovery now and may bloom in the third or fourth quarters. Excerpts:

What impact can the current global developments have on the Indian economy?

In the short term, global flows will get affected and global slowdown will affect our exports. But I don’t see this as a huge issue because I think the confidence on India is very high. Also, India is not a very large player in exports.

Every time there is a slowdown, the first thing global central banks do is to cut interest rates and provide liquidity. Thus, on medium- to long-term basis, global slowdown leading to falling oil prices will help India as we import oil. Further, interest rates and global liquidity will remain soft, which is good for India.

I see FIIs pumping in $30-35 billion in FY17 with at least ₹1-1.5 lakh crore coming from domestic investors (insurance companies and mutual funds).

Indian markets gained after Rexit, Brexit and delayed/deficit monsoon. Your comments.

I don’t follow markets or stocks as much. I largely follow what is happening in the economy and corporates. In the last four-five months, every corporate including steel and cement I have spoken to said things are improving. So, in that sense we are into the early stages of recovery. If you look at the order book of construction or EPC companies, even those show that recovery is underway. We are seeing a lot of activity in sectors such as roads and renewable energy, while lot of investments are happening in sectors such as railway and defence.

What strategy should one adopt in the current market condition in terms of cyclical and defensive stocks?

One should be growth-oriented at this point in time. I recommend investors to go for non-tradeables such as banking, housing (real estate), financial services, EPC companies and to some extent automobiles. Tradeables such as steel and cement can get impacted by global developments.

What are your expectations from the June quarter results?

I think like March quarter, June quarter will also not be that bad. We are into early stages of recovery. Recovery may start from the third or fourth quarters.

Should one be really worried about Rexit?

Raghuram Rajan has done a fabulous job. I am equally certain that the government will find someone else and I am sure there are lot of candidates. The good thing in India is talent is always there. Rajan has set the process/framework out there. One good thing about RBI is that there has always been continuity. The stage that Rajan has set is a good one for another competent governor to take things forward.

Related Topics