ROUND­TABLE All Sig­nals Green on this Street NILESH SHAH NEELKA­NTH MISHRA SAN­JAY MOOKIM

The Economic Times - - Companies: Pursuit Of Profit -

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

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