Jan 28, 2013, 12.34 PM IST
Budget season is coming closer and now the experts analysis the market from now to the. In an interview to CNBC-TV18, Ajay Bagga, Head of Private Wealth Management at Deutsche Bank says, "the market is going up, as there are lots of inflows coming in. There has been a sustained effort by the government to address global investor's concerns".
We are still expecting 75 per cent of global growth to be contributed by EMs
Budget season is coming closer and now the experts analysis the market from now to then. In an interview to CNBC-TV18, Ajay Bagga, Head of Private Wealth Management at Deutsche Bank says, "There has been a sustained effort by the government to address global investor's concerns. The market is going up, as there are lots of inflows coming in".
As global growth picks up in the developed markets in 2014, he expects 80 per cent of global growth from emerging markets (EMs) . He also sees India getting a fair share and says, "five per cent of global growth this year is coming from the Indian growth itself".
Below is the edited transcript of his interview to CNBC-TV18
Q: How do you see the market between now and the Budget?
A: There are lots of good flows coming in. That is causing the market to go up. There has been a sustained effort by the government to address global investor’s concerns. In fact today the finance minister is in Frankfurt, an event where Deutsche Bank is also involved. There he is meeting global investors.
Q: Are you getting the sense in gatherings such as these for institutional investors that this is a fundamental or long call on India or is it basically tactical right now the call they are taking on India and perhaps the region?
A: It is a long-term call. That story has been fairly consistent that despite the short-term issues the long-term story stays pretty strong, the growth is there. Overall if one looks at this year, we are expecting 80 per cent of global growth from emerging markets (EMs).
As global growth picks up in the developed markets in 2014, we are still expecting 75 per cent of global growth to be contributed by EMs. China of course will be the biggest contributor, but India is pretty high as well. So, five per cent of global growth this year is coming from the Indian growth story itself.
We are seeing India getting a fair share. We saw very good inflows last year and we are confident that could be surpassed this year as well. Looking at the first three weeks, it has been pretty confidence boosting on that front.
Q: What is your call for the February- March period with earnings getting rapped up and the Budget? Are you in the camp that believes the market is headed for new highs and the best part of the year is now?
A: Yes, I think so. Overall our EPS estimate for FY13 is about 1221 and going to about 1430 by FY14. That is a 16 per cent growth. So, Deutsche Equity’s estimate for the year end is 22500. However, my personal opinion would be that will probably take it out much sooner than December.
Q: How much can the RBI do for the market? What are your expectations from tomorrows meeting?
A: As somebody taking the rates, we would be very happy to get higher than 25 bps. However, given all the constraints that the monetary policy is under and the insistence that fiscal policy follow-up the pronouncements with actual action on the ground I think, we would be very happy to take 25 bps.
Markets have factored, one could see some amount of selling in the interest rate segments based on 25 bps flowing through. If it is 50 bps then it is hugely bullish. We would be very happy to see that, but our estimate is more towards a 25 bps now. 25 bps in March and continuing for the next including these policy. Next four policies could probably see a 100 bps cut within this year.
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Tags: Ajay Bagga, Deutsche Bank, market, emerging markets, emerging markets, global growth, Budget, Larsen and Toubro (L&T), private and public sector, banks
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