Valuation premium to reduce post budget: Morgan StanleyPublished on Tue, Jul 07, 2009 at 10:55 | Source : CNBC-TV18 Updated at Fri, Jul 17, 2009 at 10:00
On the global picture, Ramachandran said global economic indicators point to more dullness. "Global equity markets bottomed out in March. We may not see a sharp recovery in the global economy." Also see: Budget over, mkt's back to earnings, global cues: Experts Here is a verbatim transcript of the exclusive interview with Narayan Ramachandran on CNBC-TV18. Also see the accompanying video. Q: Are you going to be like the PSU bankers who said 10 on 10 for the budget or are you going to be more circumspect and say it's a missed the opportunity and could have done more? A: I am going to go with 5.5 on 10, simply because it's an interesting number different from 5. There are two ways to look at the budget. One way that many people have chosen that it's a political statement, which needed to cater to the electoral promises made to "Bharat" as the phrase has now become. But I think there is the other side as well. This was also an important policy statement. Q: What has it done to the market because the point people have made is that it has done harm. Would you say we are right back to where we started off after the budget and it is sort of come and gone? A: Indians are used to rationalization. So, after any event happens, we are very good at figuring out how things were not so bad and it was the middle part and was balanced and so on. As the old clich goes, it takes two hands to clap and the market was clapping with one hand in the stratosphere and the Finance Minister on behalf of the government was definitely in the troposphere, if not actually the sub-terrain. So, the two hands missed and they didn't clap. If fault were to be assigned, it would probably be assigned to both sides. The market jumped the gun and read too much into single events. The Finance Minster for possibly, at least in a conceptual sense, loosing an opportunity. Q: Do you think the market has priced it in and we get back tracking global cues or is that more of a lingering impact for FII flows etc? A: It is very tough to know precisely. But if I said that India had sort of a 10% or 10-15% premium versus the rest of emerging markets, then we have subtracted and gone back to one this morning. I think there is a little left because a few things were left to the future for example information on the petroleum subsidy and so on. So, there were lots of things on the budget, divestment is the other one which might happen. I think there is still about a 5% cushion premium being accorded to Q: Which way would you lean now by the way of disinvestment or divestment? Would you stick with the USD 4-5 billion that was earlier talked about or do you think that needs to be scaled down? A: I think it will be scaled down in an implementation sense. Continued on next page ...
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