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India Well Set For Marathon but Investors Keen on 100 Meters Relay


Looking at the long run in the Indian prospective everyone is bullish on India. All things are falling in place like the crude prices are lower, lower fiscal, declining interest rates, higher GDP growth and last but not the least current account deficit. In the markets a lot is discounted in the price today and so also the India Rupee is one of the best performing currencies amongst the emerging markets. The million dollar question which is arising in the minds of the investors is if anything has changed on the ground reality because virtually the changes reflected are obvious but the corporate earnings are not complimenting each other.

 On the one hand the non performing loans of both the private and the public sector unit banks have not been up to the mark and the guidance for the next quarter is on the lower side as compared to the current quarter. Another thought running in the mind of the dedicated funds whether the top slicing is the need of the hour as the situation is not so rosy on the ground reality although the confidence is very high in terms of long run, and more over there is no point to trim some of the positions as by the next year will have to buy them, back the next year almost at the same price.  If we look at the in the Indian perspective the Global emerging markets funds are a bit too overweight on India by say at least 400 basis points which is actually an all time high and so also the Asia based investors are too overweight by 100 basis points on India which too incidentally are on the all time high.

 Actually the FIIs own 23% market cap of India which too is again on the all time high.  Then there is a global fund which is an important pool which is the macro fund has missed boarding the India bus at dalal street and this is one of the reason why the investments are pouring in India through ETFs, because these macro funds do not have research houses to guide them for the stock picking they just have the quant models and the portfolio is managed as per the weightage. Then there are various pools of money and despite the markets which rallied to close to 30% last year The FIIs flows were $16 billion.

 So the markets become buy on rumors and sell on the actualities, the India dedicated funds are seeing the inflows, one of the hiccup which may come is the US Fed may hike rates anytime this June or September and then there may be some outflow of funds from India , and still the FIIs will be attracted to India again because it is in India where the FIIs have made fortunes and as a matter of fact the obvious sectors are ready for the turn around and will rebound especially those sectors which have bottomed out and are good derivatives of the economy are headed to do well obviously. The big players are obviously going to stick for the benchmarks. Just because of the various elections both the government as well as the corporate refrained from investing so now when the picture is getting clearer the investments from all quarters will pour in and at the moment of the witnessing the execution on the ground will only trigger the positive sentiments. So the US rate hikes, crude prices and the execution are some of the factors to be keenly watched.  
This only goes on to prove that still a large sum of money is waiting to come to India. These times appear to be a bit funnily perturbing because the government is implementing the reforms and policies with a much long term vision and it is like a long marathon whereas the investors are acting a bit short sighted and running for a 100 meters yes and that too 100 meters relay!  Whereas certain implementations may take some time to come into action.


  In the Asian zone three countries are expected to perform well are India, Indonesia and Japan as globally the inflation and the interest rates are on the decline and on the other hand the liquidity is on the rise and the capital is a bit on the drier side. So it is better for the investors to buy and hold for a longer period of time. In short term there are some good surprises like RBI cutting the interest rates sending positive signals and it is time to pull up your socks and ready, steady and Go!!!!!