Outlook for India, China still grim: Bank Julius Baer

Dr. V Anantha Nageswaran, Head of Investment Research at Bank Julius Baer on speaking to CNBC-TV18 said, “I am not entirely sure that you can point to a sector or two that could provide a good hiding place for the investors who are looking to arrest losses or even lock in some gains.”

In a long-term view for 6 months or beyond, I must concede that the outlook still looks grim especially for India and China because the earnings downgrade is still not in the price, said Nageswaran.

Excerpts from CNBC-TV18's exclusive interview with Dr V Anantha Nageswaran:

Q:  What is your sense currently, we have seen a lot of financial stocks sell out in the first half of the year and we are also seeing resource stocks coming in a fair bit under pressure, are there any sectors or pockets which you feel will halt this sort of a downside in the Asian markets, is there any value or its still in an avoid in most of these markets?

A: If you look at the earnings expectations in general in Asia, I have a feeling that there is more work that remains to be done in terms of becoming more realistic. So in that sense I am not entirely sure that you can point to a sector or two that could provide a good hiding place for the investors who are looking to arrest losses or even lock in some gains. Unfortunately no such free lunch exists in my view as far as the Asia is concerned.

Q: What’s your call on markets like India and China which are currently trading at their all time lows?

A: I suppose in the very short term in India, China and also in many global markets, there is extreme oversold price action and sentiment is very bearish and that automatically sets up the stage for some kind of some kind of a counter trend rally but how early it would come, how long it would last and how strong is obviously unknown, so therefore those who are looking for counter trend rally should position themselves for it but with tight stops.

In a long-term view for 6 months or beyond, I must concede that the outlook still looks grim especially for India and China because the earnings downgrade is still not in the price and more growth disappointments would come in for Asia in 2009.