ROUNDTABLE All Signals Green on this Street NILESH SHAH NEELKANTH MISHRA SANJAY MOOKIM
MD, KOTAK MUTUAL FUND
India’s long-term macro story remains good and that attracts a lot of investors. If the flows into emerging markets are good, India will get its share of allocation. FII flows should also look fairly positive compared to what we had seen in the last calendar year when there was a huge outflow from emerging market funds. In calendar year 2016, we still were net positive when we saw outflows from emerging markets.
Overall liquidity scenario remains fairly good. Risks, if any, for the market are more from the global factors, which could hit you, and initially lead to a strong outflow from FIIs and if local investors also fear that, you could see some slowdown over there.
Over the last one year, whatever known events have happened, the markets have reacted opposite to that. This is going to be some unknown risk which could cause a correction in the markets.
I don’t expect large interest rate cuts from here on. I think you could see another 25-basis point or 50-basis point cut in the next nine months or so. The immediate benefit of demonetisation was that you saw transmission of rate cuts and after that we saw the banks Photo: NISHIKANT GAMRE transmitting that. It was a necessary move. PSU banks are coming out of challenges by focusing on current NPAs and not going for fresh loans. Smaller banks are anyway going for consolidations. If stronger banks take over weaker banks, it will take them few years to clean up the balance sheets. Given this kind of scenario, public sector banks’ ROEs will looks depressed unless there is a strong recovery in the economy. If the ROE is not good, where is the question of value creation. Hence we believe greater value will be created by the private banks in the medium to longer term. INDIA EQUITY STRATEGIST, CREDIT SUISSE DIRECTOR, BANK of AMERICA MERRILL LYNCH