India Stocks' Long-Term Trend Remains Intact Despite Short-Term Hiccups: JM Financial's Vinay Jaising
The FIIs' ownership in Indian equities is only 16.5% and too low, he says.
The long-term trend remains intact for the markets as the worst is behind for the economy, with possible hiccups for the next three to six months due to a higher-for-longer interest-rate scenario and a negative global picture, according to Vinay Jaising, managing director of JM Financial. He pointed out that everyone is talking about interest-rate cuts, but it is much closer to peak, except in a few countries like Japan.
"When you do see interest-rate cuts, technically, the economy does get better and the cost of doing business does improve," the co-head of portfolio management services told NDTV Profit's Niraj Shah in an interview.
However, there can be a lot of news that is negative on the global front, on a higher-for-longer interest-rate scenario and slowdown of projects for the next three to six months and probably nine months, he said.
"So, I would be concerned about just exports or global slowdown much more than a recession," Jaising said. "But I think, with interest rates being at their peak, if I was a one-year investor, there are a lot of reasons to really smile out at."
Post-Election FII Flows
The foreign institutional investors' ownership in Indian equities is only 16.5% and too low. Last year saw $25 billion in inflows from the FIIs, and another $25 dollar inflow from the systematic investment plans and pension funds, according to the managing director. "You saw a lot of sticky money coming into the country last year."
If the FIIs were to increase by another 3.5% to their peak, there can be as much as $150 billion in inflows. That is not going to come one time and not pre-elections, Jaising said. "Post-elections, there will be a lot of liquidity coming in globally. Domestic also looks good."
So far, only government capital expenditure was in focus, but once the corporate capex starts growing, economic growth can be even faster, Jaising said.
HIs comfort areas for investing are in the capex cycle, public sector undertakings, telecom and autos companies. "Coincidentally, most of these companies are largely in the small and large-cap space."
Watch The Interview Here
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