John Praveen, the Newark, New Jersey-based chief investment strategist at Prudential International Investments Advisers LLC, which oversees $750 billion in assets, comments on his outlook for Indian stocks. Prudential is a money manager in India through its local unit, Pramerica Asset Managers Pvt. Praveen gave his comments in an e-mail interview.
India’s federal investigating agency arrested LIC Housing Finance Ltd. Chief Executive Officer Ramachandran R. Nair and seven bank and brokerage officials following a probe into bribes and improper loan disbursals. The Bombay Stock Exchange’s Sensitive Index, or Sensex, climbed 0.8 percent to 19,615.38 as of 10:16 a.m. in Mumbai today.
On foreign investor sentiment:
“The proliferation of recent scams does tarnish the reputation of India in the eyes of a foreign investor, to some degree. However, corruption is not a new phenomenon, in India or in other emerging economies, and foreign investors have to a large degree incorporated corruption into the risk premium in evaluating the attractiveness, risks of investing in India or other emerging economies.”
“The gridlock in the Indian parliament and the possibility of greater bureaucratic caution could lead to policy uncertainty and concerns among investors about delays in undertaking reforms or slowdown the government’s disinvestment process.”
On the outlook for corporate earnings, stocks:
“Corporate earnings growth is also expected to be around 25 percent in 2011. Valuations are slightly expensive relative to other emerging markets.”
“We expect foreign investors’ interest in India to remain solid and the Indian equity market to recover in December and remain in an uptrend in 2011. However, the stock market is likely to remain volatile.”
Praveen said he’s maintaining his 2011 forecast of 23,500 for the Sensex.