India may see volatility in fund flows: Subodh Kumar

Excerpts from Power Breakfast on CNBC-TV18 Watch the full show » RELATED NEWS US stocks close higher ahead of long holiday weekend Mkts may move ahead and touch new highs: Experts ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Japanese indices declined today on financial stocks such as Mitsubishi UFJ Financial Group and exporters such as Nissan Motor Co. as the yen strengthened against the US dollar, while Taiwanese indexes advanced on US gains.

Japan's Nikkei fell 0.67% or 111.04 points at 16,458.05.However, Taiwan's Taiwan Weighted gained 0.26%or 23.34 points at 9,005.50.Singapore's Straits Times was up 0.02% or 0.79 points at 3,393.70.South Korea's Seoul Composite rose 0.32% or 6.01 points at 1,879.25.

Subodh Kumar , Chief Investment Strategist at Subodh Kumar & Associates believes that the Asian markets are mixed today maybe because the American players are absent in the global markets due to Labour Day holiday in the US .

He further adds that a lot of money flows to India haven't been FDI but more in the category of portfolio investments, so there is potential for fund flow volatility.

Excerpts from CNBC-TV18's exclusive interview with Subodh Kumar

Q: The way we have opened this morning and the Ben Bernanke comments over the weekend, does it give you comfort that the worst is behind us?

A: No, first of all there is the Labour Day weekend holiday in the United States today, so it maybe that American players are absent in the global markets. So maybe the Asian markets are mixed for that reason.

After Bernanke's comments; this coming week you have the Reserve Bank of Australia, The Bank of Korea, the Bank of England and ECB all discussing rates and those will remain relatively flat. Although the Central Banks are saying they will provide liquidity for the credit pinch, I think what one has to keep in mind is that there are hundreds of billions of dollars of refinancing; whether it is LBO's or adjustable rate mortgages in the US that has to be done over the next few months.

The reason I am a little bit cautious on the market implications is that epecially II and III tier companies globally are going to find their debt plans will be a more expensive. And we will also start to see the earnings form investment banking companies as well as major US banks come through in the second half of September.

Q: In light of what's happening globally what is your call on India?

A: When we look at Emerging markets and India, clearly this credit crisis unlike 1997didn't start in Asia but one thing to look at in India is that lot of money flows to India haven't been FDI, they have been more in the category of portfolio investments. So there is some potential for fund flow volatility.

One thing to point for the Indian markets is that, in the global market the focus of Infotech companies in this downdraft has improved and I think the Infotech sector may better sit from better perceptions worldwide that this sector is going to withstand whatever is going on little bit better.