Nipun Mehta, Executive Director and Head of SG Private Banking (India), advices investors to stay in cash, and be as risk averse as possible till there is a degree of certainty in financial markets. “As far as fixed income is concerned there are concerns on the quality of assets, so try and remain as liquid and risk averse in assets as possible till this adversity passes over.”

Here is a verbatim transcript of the exclusive interview with Nipun Mehta on CNBC-TV18. Also watch the accompanying video.

Q: These are ominous times as advisor for your private banking clients, are you asking them to buy at this time or today actually?

A: I think these are ominous times; these are times of complete uncertainty of what will happen over the weekend. What will happen on each given single weekday, there are developments happening even on holidays, in global markets are in the terms of interest rate movements or in provisions that global financial institutions keep making.

We are completely in uncertain volatile times what we are clearly advising clients to stay on cash, to be as risk averse as possible till there is a degree of certainty that happens on these financial markets. Even as far as fixed income is concerned there are concerns on the quality of assets that will be there, so to try and remain as liquid in asset as risk averse in assets are possible till this adversity passes over.

Q: A lot of your private banking clients and customers may have got request from banks to put in a decent amount of money at a decent interest rate. Can you give us an idea of what kinds of rates are being offered for bulk deposits or slightly flat deposits?

A:  You have ranges for deposits, starting from 9-9.5% going up to about 13-14% for deposits that are happening, depending on which bank is offering it.

Q: You are giving me one-year rates?

A: Yes, I am giving you one-year rates.

Q: Till now the talk was where is the bottom? We have been talking about it ever since about 15,000, now the real talk in the market is that even if we hit the bottom what next. Do you really see if and when we hit the bottom a V-shaped recovery will have a U-shaped recovery where the base of the U would be much longer?

A: Yes. I think as and when that happens and as and when we look at the base of the recovery, I think it is very clearly a case where you are not going to have globally a fair amount of liquidity, which could be flowing in not just into fixed income markets but also into equity markets. You can segregate that into emerging markets or developed economies, but, liquidity globally is something that is likely to be a concern and unless that starts happening, you are going to see a base which is much longer than what you have really seen earlier.

Having said that, are the domestic savings large enough to ensure that the base need not be very long and could you see a sharper recovery? My sense is that while the savings are high enough you are not likely to see a lot of that essentially flowing into the equity markets, as fast as what you would have typically seen for an Foreign Institutional Investor (FII) flow coming in. So even though there could be flows that could be happening it is only going to be gradual and that is the reason why you are going to see that base being much longer than what you would have seen, as opposed to a steeper curve.

 Q: The August IIP numbers have come in at 1.1% versus 10.7%. looks like we have suddenly woken up to an industrial de-growth which was already there?

A: It is indeed surprising when we look at this figure in comparison to almost several quarters of the kind of growth we have seen. What is important is what impact it will have on the entire corporate sector earnings and one hasn’t seen the kind of de-growth that this global slowdown is supposed to project on to the corporate level earnings. We have continued to see even for the March and the June quarters that range of 15-20% earnings growth. I think what you could see probably then is that if these are the kind of IIP numbers that come around you might be little surprised on the kind of September quarter figures, which we might see for the corporate sector.