Published on Thu, May 21, 2009 at 10:14 | Source : CNBC-TV18
Updated at Fri, May 22, 2009 at 08:53
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Positive on India but valuation a concern: BoA-ML
Michael Hartnett, Co-Head - Investment Strategy, Bank of America-Merrill Lynch, said India now trades at a premium to other emerging markets “For India, in the short term, we have concerns on valuations and also on the current account, budget deficit, the rupee,” he said.
Michael Hartnett, Co-Head - Investment Strategy, Bank of America-Merrill Lynch, said India now trades at a premium to other emerging markets "For India, in the short term, we have concerns on valuations and also on the current account, budget deficit, the rupee," he said.
According to him, India can see substantial growth if the corporate sector gives good return on equity (RoE). He added that if commodity prices continue to stay low over the medium term, it will benefit the country.
Here is a verbatim transcript of the exclusive interview with Michael Hartnett on CNBC-TV18. Also watch the accompanying video.
Q: Were foreign institutional investor(FIIs) a bit surprised with this election result, the kind of money flow which came in on the first day that they could trade. It seem like many of them were caught on the wrong foot?
A: I think firstly going into the election, our survey did not show that people were massively overweight on India. In fact India was one of those markets that were mostly forgotten about for much of the year as people focused on China, Russia and Brazil. I think the election results surprised a lot of people. Politics has always been a risk when it comes to India. So seeing such a decisive pro-business victory I am sure there tremendous amount of hope about India over coming years and you saw the market react pretty dramatically to that.
Q: How are they feeling about India as a market now and what is it that's giving India a bit of a plus-plus against the others?
A: We thought India is a wonderful investment story for many years now. It has great demographics, great growth profile, many wonderful companies, so we think that India over the medium-term is very exciting. Short-term we have conceron valuations and also concerns on the current account, the budget deficit, the rupee. Of course some of those have been laid to rest recently with the wonderful election news out of India. Continued on next page ...
