See downside risk in global mkts: Bank Julius Baer

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » 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

In an interview with CNBC-TV18, Dr V Anantha Nageswaran, Chief Information Officer, Bank Julius Baer, speaks about his reading of the global market and his outlook.

Here is a verbatim transcript of the exclusive interview with Dr V Anantha Nageswaran on CNBC-TV18. Also watch the accompanying video.

Q: What is your sense right now all these issues emanating from Greece, China, fiscal deficit concerns across the globe and in the US that triggered a lot of selling in terms of short-term money, exchange-traded funds (ETF) money and hedge funds? Do you sense that that short-term outflow that's caused this dramatic collapse across the globe in now nearing the end or do you sense there is a lot more by way of redemption pressure that we may see?

A: At the global level, it is hard to say whether the pressures would abate. In the case of Asia and also for India, I think the pressure should abate a little bit soon because most of the Asian markets or Morgan Stanley Capital International (MSCI) Asia ex-Japan is now below its long-term fair value of 1.8 times price to book and as we get closer to 1.5-1.6 some buying might come through.

In the case of India, the Budget, now that it's only couple of weeks away or a bit more than that, investors might prefer to adopt wait and watch attitude to see what is coming from the Finance Minister.

Q: Do you think that the kind of cuts we saw across markets from the beginning of the current year is more or less over or do you think accidents like in Greece and perhaps in other countries in euro zone may continue to put pressure or we haven't seen quite the correction phase that started off maybe late last year or early this year?

A: I would think so because we started the year with a very high valuation level. If you look at the Robert Shiller's Cyclically Adjusted Price Earning Ratio, we started that year at 21 times, it's definitely not a level at which you would have a screaming buy in the market, this is for S&P 500.

Also, it is not just Greece or Portugal, Spain, there are issues with the US and the UK and then we have had the escalation of tensions between United States and China and by some chance if in April we do have the US treasury getting closer to or actually naming China a currency manipulator, then I think all hell would break lose and that would be globally negative. So these issues are still outstanding and therefore the best one could hope for is a volatile trend on the whole, but the risk is biased towards the downside in global markets. In Asia, we are hoping for a slightly better story though.