FIIs are cautiously bullish

India may no longer be a hot destination for FII money as most FII strategists are tacitly underweight on India. Their big concern however is the rising interest rates and plateauing growth. J P Morgan, Citigroup, CLSA, Morgan Stanley are some proponents of such a thoughts. They are unanimous in their thinking that the euphoria shall cool off and some other emerging markets may attract greater attention in coming months…
J P Morgan’s Asian Regional Strategist, Adrian Mowat is of the opinion that other emerging markets look more positive compared to India. His advice to his clients is pull out some money from India and park it at Taiwan, China, Singapore, South Africa, and even Russia. But he also feels that the downside here is limited as the huge Indian savings shall flow into the Indian equity markets in a bid for higher returns post inflation.
Jim Walker, chief economist at CLSA, sees the euphoria dying down for India but is yet confident about the Indian economy's growth. He has other macro economic global factors worrying him. Tightening of monetary conditions globally, especially in the US shall add to the woes of emerging markets. "It is not the rate rises but action and monetary aggregates in the US, especially the very high power of monetary base that's been slowing down for three years and shall give financial markets more difficulty as the year progresses in terms of the real economy taking more of liquidity. Financial markets are going to find it hard to move up against that. In the past when that had been the case in USA, emerging markets did not do very well."Citigroup's Hans Goetti may not be that bearish despite India being expensive on the P/E count as he feels that the key to the Indian market's rise rests with fund flows which have so far been good.Morgan Stanley’s Malcolm Wood may be a little underweight on India but feels that the global appetite for Indian stocks is not through and shall remain unabated.