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|Subject: Political Deadlock is Scaring Investors Away Tue Sep 04, 2012 2:16 pm|| |
Political Deadlock is Scaring Investors Away
Hedge funds have left,only long-term investors still in India,says Raamdeo Agrawal
Investors are worried over the possibility of prolonged policy inaction and absence of bold decisionmaking in view of the forthcoming elections,said Raamdeo Agrawal,joint MD,Motilal Oswal Financial Services.In a chat with Apurv Gupta on the sidelines of the annual global investor conference hosted by the firm,Agrawal said the political deadlock is scaring away investors.Edited excerpts:
How are you assessing the mood among investors Are they worried about the investment climate in India
We are passing through one of the worst levels of growth.The doubledigit growth expectations have been tempered down to a much lower rate now.Apart from concerns over growth,another worry is further policy inaction and lack of bold decision-making in view of the forthcoming elections.The deadlock is scaring investors away as not only the opposition parties but even most of the allies (in the ruling UPA coalition) are in a confrontational mood instead of trying to forge consensus.
What are the bright spots that are keeping investors interested in that case
Investors know that India has the resilience to bounce back.What also comforts them is that we have around $300 billion reserves,which are sufficient to keep the trade going.While RBI has not been able to tackle rupees depreciation,the fall in the currency has benefited in a way,in the sense that competition from Chinese products has gone down.Most companies that were facing a daunting challenge from Chinese products are relieved due to cost offset of cheap imports.
What kind of investor interest are you seeing in India
In terms of investor profile,the hedge funds community has completely vanished.This time there are only long-term funds.Most of the large institutional investors have seen these kinds of cycles or events in many other countries.They are in the best position to see through these noises and see where the pocket of investment opportunity lies.
What are the sectors you are betting on for growth
While the consumption theme is strong,capex is not happening right now due to various issues like land,raw material and high cost of funding.Sectors like telecom have growth potential but policy issues are a overhang.Similarly,PSU banks have value but are old-fashioned bets.The opportunity to make money is relatively much higher in the private sector banking space than from public sector banks.FMCG is expensive but will keep doing well due to all the liquidity going there.They will be the last to fall.Given such a situation,it is difficult to take a sectoral call.The focus is on individual stocks.