To know what FIIs make of the BJP win in both Gujarat and Himachal Pradesh, CNBC-TV18 spoke to Jonathan Schiessl of Ashburton who is one of the big India investors.
From a market perspective, BJP winning is a relief and from democracy perspective having a stronger opposition party is not bad till next elections.
More importantly, the government needs to see that the economy is growing but not at any cost because lot of investors are worried that we may see lot of populist measures coming through, so one needs to keep an eye on that.
Schiessl said for years now we have been waiting to see earrings recovery come through and as growth starts coming though earnings will also come through which will likely be broad based. One is not looking for rerating in valuations but a return from earnings.
When asked if US market rally continues, will it be positive for emerging markets (EMs) like India, Schiessl said what happens to dollar going forward is going to be of massive consequence. Market is pricing in a less aggressive rate hike than what the Fed is saying itself.
So, outlook for the dollar is crucial for EMs and certainly to India as well, said Schiessl, adding that there is a bit further to go for the dollar.
So, if US continues to rally then the EM complex as a whole would still look attractive from a valuation perspective but India is looking fairly priced within that complex.
Talking about their large bet – Infosys, the house still continues to be upbeat on the company and valuations are still attractive, said Schiessl. So, the house is comfortable with their position and may even add to that, he said.
The house is also bullish on financials and post the recapitalization news have added State bank of India into their portfolio, said Schiessl and believes it is a good two years story at least.
They also have some exposure to NBFCs like HDFC and Capital First and are still comfortable with their position over there, said Schiessl.
The house has owned some capital goods related stocks for some now, he said, adding that they own one road builder and two stocks focused on ports and rail.
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