The perception of growth will be a key driver in reducing the foreign portfolio investors' underweight positions in India, said Vikas Pershad, portfolio manager, M&G Investments. India has growth, but the perception about the quality of growth weighs on investors. However, it's much better in mid-March, compared to the situation in September 2024, he said.
"We're very excited by opportunities we see (in India) on a multi-year horizon," he told NDTV Profit. A lot of froth is flushed out. Opportunities are now rising in Indian markets. Six months from now, M&G Investments will reduce their underweight position on India significantly, Pershad said.
From second half of calendar year 2023, M&G Investments had started to increase allocation in China. By the third quarter of calendar year 2024, the asset management company was overweight on China. During the same period, among Asian countries, M&G Investments was already underweight on India.
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Recently, it has been re-assessing its pan-Asia strategy to close the gap between China and India. There's some meaningful divergence between the two markets, according to Pershad.
M&G Investments Portfolio Manager Vikas Pershad was speaking to NDTV Profit's Executive Editor Niraj Shah at India Market Open Show on Thursday morning.
Currently, India has a lot of bottom-up opportunities because of clean balance sheets, technology advancements, pricing power, and expanding margin across sectors. Many stocks are now down by 20–30%, but their earnings are up, he said.
M&G Investments is overweight on automobile ancillaries and electric vehicles. These spaces will likely create opportunities for long-term investments, according to Pershad.
The investment firm has transitioned from being overweight on passenger vehicle to electric vehicles and automobile ancillary companies, noting the opportunity. However, the firm is considering re-investing in Indian PV companies but in different players, the portfolio manager said.
Non-banking financial companies have served M&G Investments well, he said.
The market is trying to understand what will be the aftermath, with US EV player's entry in India, along with risk of Chinese EV players' entry. M&G Investments is also assessing probable outcomes in the automobile space in this regard, said Pershad.
When it comes to investing, the firm prefers to consider companies, rather than using large and small-cap as metric. It has found plenty of good counters in the small and mid-caps to invest, according to Pershad. M&G Investments has exposure to air conditioner manufacturing, music streaming, auto-parts manufacturing companies and small hospitals, he said.
"So, I would always say that India is always the market for small and mid-caps. In fact, it turns out, India is the best market in the world," Perhsad said.
Lastly, as an FII himself, Pershad suggests traders to mull two questions before investing in Indian equities. First, what's in the price? Second, what's perceived growth instead of growth outlook?
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