See mkts picking up, GDP at 8% by yr-end: DSP ML

Q: The fallout of all this concerns however is the fact that a lot of people now are scaling back expectations of a recovery, what looked like a market that would pick up in the second half of this year is being pushed into 2009, any rate cuts, our own policy makers is being pushed into 2009, do you think as a year this is going to be tough on us before we start showing any meaningful recovery?

A: It is so difficult to judge when financial markets move around. The real economy, we think is going to continue perform at about 8% growth, for sure. The impact of slowdown in the US and globally on India, will be quite moderate.

The export sector of Indian economy is still relatively small part of the economy and the growth drivers of consumption and investment remain very positive. So if we look at the real economy, we see a very good level of growth in India again this year.

In terms of the impact on the financial market, I think we may be surprised with how the Indian markets perform as we move through this year. There has been a big adjustment already and there has been a big adjustment in China already. I think one will see these markets pick up later in this year. I am not a market forecaster; so I cannot give particular levels but I think we will be surprised at how the financial markets anticipate change and that change is likely to be positive in the back half of this year.

Q: To get back to that point about inflation, most part of it has been stoked with what happens with global commodities – do you see commodities seeing this much of interest both by way of money and by way of momentum they have got going?

A: I think we are seeing big shifts in commodity prices and seeing it on a sectoral basis and the big driver for some of those commodities remain in place which is the positive story in India, the positive story in China, in Asian emerging markets. We are seeing economies grow at a very attractive rate; they need to grow at attractive rate in the interest of the people and global poverty. So some of these drivers will remain in place.

On the other hand, we are seeing a slowdown in the US; there was a lot of news out last week and the real economy in the US - as the Chairman of Federal Reserve spoke about the likelihood of recession that will have to be moderated and so how this factors pan out over the year, is difficult to judge. But one will have to assume that commodity prices are going to be higher than they would otherwise be for the foreseeable future.

Q: What sense do you get when you talk to your large institutional clients on what they are feeling about India post correction? And what are your own plans for DSP ML for the rest of the year?

A: I wouldn’t want to specifically talk about specific stocks.

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