Compared to India’s peer
such as China, Russia and Brazil which have rallied significantly this year,
the India’s stock market valuation is more reasonable and India’s prospects are
weighing more optimistic. The investors should remain invested with the
equities and one should not be impressed by the withdrawals done by the foreigners
which are driven by the fact that few fund managers who were underweight on the
peer markets.
They are rebalancing their portfolios due to
strong performances in these markets and not because of any expression of mega
disappointment due to India’s growth and reform story and as such the global
environment is such that the fund managers become panic by the minor tremors of
technical adjustments. India has a very encouraging outlook amongst all the
emerging markets and with the flood of participation by the government bodies
and the local investors will increase the participation further only to trigger
the additional capital flows into the Indian markets.
The difference in the
valuations amongst the peer has converged significantly since last quarter and
now no country is having any specific advantage. The foreign investor will remain
focused the basics like the growth and the reforms and as such India still
looks like a shining star amongst the emerging markets.
The reforms which were like
low hanging fruits were delivered quickly where as the bigger ticket reforms
will definitely take its own time as the country of this huge geographical,
political, social and cultural diversity and hence the reforms will take its
own gradual pace. As far as the prices of the crude is concerned they are bound
to trade around $60-70 a barrel for the next 18 months and the US dollar is
expected to escalate against the all major currencies and on the other hand the
rupee will be at its modest against the dollar moving up.