Positive on Indian mkt; see growth pick-up ahead: HSBC

Indian equity benchmarks have failed to impress investors and the market has not provided the best of starts to the year. As a result, the mood about India is also not so upbeat. Sanjiv Duggal, Investment Director-India Equities at HSBC Global AMC believes people were probably expecting much more from the Budget. However, he feels the Budget was quite up to the mark, taking into account the fact that the fiscal deficit for FY13 stood at 6 percent around 6 months ago and the target for the next fiscal now is lower than 5 percent.

Also read: Budget 2013: India to see double-digit returns in 2013, says UBS

Therefore, Duggal remains positive on India and sees a lot of opportunity in the market. According to him, the Indian economy has slowed down at the moment but he sees gradual pick up in growth in the coming quarters.
 
Duggal stressed on the need to be patient while investing in India. Besides, he considers India to be better placed when compared to other emerging markets. He explained, "We have a particular process that we follow so we are looking at profitable companies versus their valuation. Sometimes if there is in some stocks a bit of blood bath they come into our screens and they look attractive, profitable. It is an opportunity, we are very happy to buy into them or sometimes even add to our holding in the odd name."

Moreover, Dugal feels Indian equity has delivered great returns and investors can pry on opportunities when there is a lot of bad news in the market.  "That is typically a good time to put money and when there is great news and the market is hitting new highs, you should be a little cautious," he added. 

Here is the edited transcript of the interview on CNBC-TV18.

Q: How are you feeling about the market, it has not been the best of starts to the year and the mood seems not very great about India right now? You run such a lot of money, what is your sense now?

A: I think people were expecting more from the Budget in particular. We have had the Finance Minister (FM) come to Singapore and other places as well. Maybe, people were a little disappointed. However, from our point of view, we thought the FM did a good job in terms of the Budget.

Prior to the Budget, if you go back six months, people were looking at a 6 percent fiscal deficit for FY13. It was 6 percent six months ago and the target going for next year is below 5 percent. So, it is a tremendous change. However, I think people forget what has happened over the past six months.

Therefore, we think India is looking good. There is a lot of opportunity. We find a lot of attractively valued stocks in India. Both our emerging market (EM) team, our Asian team and us, from an India dedicated point of view, see lots of opportunity. As things improve further, as we go forward, that value will get unlocked.

Q: While there has been considerable progress on the fiscal deficit front, I think people started fretting about growth because growth is down to 4.5 percent, maybe this quarter it is quite bad as well. Are global investors beginning to feel a little shaky about India’s growth prospects?

A: I think people are expecting the economy to slowdown. Right now, people think this is roughly the bottom. Maybe the numbers just reported were the bottom, maybe the current quarter and then things should pick up as we go forward. It might not be a sharp pick up but, you will see a gradual pick up which is better news for India.

Hence, maybe when you exit next year, you could be over 6 percent exit rate. So growth will pick up. Again from a fiscal point of view, if you are looking at inflation, the fiscal deficit, current account deficit, I think India is going through the right sort of bottoming out process. You do not want these big-bang movements, which create a lot of these imbalances.