A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte. in Singapore, which manages about $350 million in Indian assets, comments on Indian stocks. He spoke today in a phone interview.
The Bombay Stock Exchange Sensitive Index, or Sensex, rose 1 percent to 18,424.62 as of 12:54 p.m. in Mumbai.
“The outlook does not look good. We do not see drivers pushing the market up in the second half of the year. India is tied to the global economy through foreign fund flows. We do not expect the U.S. economy to turn around and we do not see U.S. interest rates going up in the medium term. We expect the Sensex to oscillate between 17,000 and 18,500 for the rest of the year, barring major events.”
On earnings outlook:
“We have downgraded our corporate earnings estimate for the year ending March 31, 2012, by five percent as we don’t see a phenomenal growth. We expect earnings to rise by about 15 percent this year, compared with about 20 percent last year.”
On investment strategy:
“Fund managers are preferring to act safe, book profits and increase cash in their portfolios. Corporate governance issues and government scams are putting all investors in big uncertainty. We will wait for the horizon to be clear before investing.”
On sector recommendations:
“We continue to hold infrastructure, banking, consumer, education and hospitality stocks in our portfolio as these sectors will benefit from India’s growth. We’re not looking at fresh investments till everything is clear.”
On foreign fund flows:
“We don’t expect foreign fund flows to increase in the next half of the year. We expect flows to remain muted. We don’t expect Chinese and Japanese investors to add Indian equities now.”
Overseas investors bought a net 4.84 billion rupees ($108 million) of Indian stocks on June 23, the first purchase in 10 days, paring their withdrawals from local equities this year to 19.3 billion rupees, according to the most recent data from the nation’s market regulator.