Pankaj Razdan, deputy chief executive offer for financial services at Aditya Birla Group, comments on the outlook for Indian equities. He spoke in an interview with Bloomberg-UTV.
The BSE India Sensitive Index tumbled 2.2 percent to 16,501.74 at the 3:30 p.m. close in Mumbai, the most since Aug. 18 and the lowest level in two weeks.
On outlook for markets:
“India’s structural story is great. Our growth is good and we may see foreign fund inflows. India is under-owned by foreign investors. The markets are affected by global problems. The problem lies with Europe, not so much the U.S. Volatility will continue till Europe’s problems last. India is still among the cheapest markets given the earnings growth. Our debt-to-GDP ratio is much lower than the U.S., Europe and China. I see a 13 to 14 percent nominal growth. India is amongst cheapest markets given earnings growth.”
On outlook for inflation:
“We need to live with higher levels of inflation. We can’t hope to live with 5 percent levels. The Reserve Bank of India has done a good job of controlling inflation. Right now, RBI is waiting for strong signs. It may still increase rates by 25 basis points. Small sections of the market believes the RBI will pause.”
India’s central bank has raised borrowing costs 11 times since the start of 2010 to damp living costs that are rising the fastest among the so-called BRICS countries of Brazil, Russia, China and South Africa. The bank’s next policy announcement is due on Sept. 16.
“Buying at 5,000 levels shows confidence in India. Given growth, the consumption sector is expected to do well. The consumer and infrastructure sectors are expected to do well.”