Feb 05, 2013, 04.01 PM | Source: CNBC-TV18

Budget 2013-14: Expect major FII inflows only post budget: ICICI Securities

"Recent government reforms have boosted the investor sentiment. The investors are willing to invest in India and the mood seems distinctly positive," says Anup Bagchi, MD & CEO, ICICI Securities in an interview to CNBC-TV18.

"Recent government reforms have boosted the investor sentiment. The investors are willing to invest in India and the mood seems distinctly positive," says Anup Bagchi, MD & CEO, ICICI Securities in an interview to CNBC-TV18. According to Bagchi, investors want government to deliver before Budget and any major foreign institutional investor (FII) flows can be expected only post Budget.

Also Read: RBI tightens rules on low-coupon bonds

Further Bagchi adds that money flow in India has improved in the last six months and the funds are now shifting from debt to equity funds.

Below is an edited transcript of Anup Bagchi's interview on CNBC-TV18.

Q: How are investors viewing India ahead of the Budget, are they a little more optimistic due to which you could see increased buying in the run up to the Budget?

A: I think market has already run up and they think, after October, much has been done, much has been said but they are thinking that market perhaps has run a bit ahead and they will look into the Budget and see whether we are walking the talk or not. If we are, then market is going to run up quite significantly. For investors, the mood seems to be very distinctly positive than what it was when I had visited here six-seven months back.

The investors are willing to invest in India, there is a large turnout, very interested in meeting Indian companies but at this point of time, let me look at the Budget, let me see if you can indeed walk the talk and then we will again take a call positively.

Q: What did you make of the jitter both on Wall Street and across Asia in the past 24 hours? Is globally, a lot of credit has already been given to the growth impulses or should we just ignore this downturn and still believe that at least this quarter is going to see a lot of money coming into equities?

A: No, in fact in very large fund houses there have been movements, money is moving from credit to high yield credit and is just a matter of time, it will start to move from high credit into equities. That is one.

The second trend I gathered was that six-seven months back, both India and China were question marks. Now, money has started to flow into Asia. We do not get so much Indian money from dedicated Indian funds but from allocation of global emerging market. That is also turning positive.

So, from an Indian perspective, there is optimism and they feel that if you walk the talk, money will flow in. Most of the funds here are underinvested in India and they see that if growth comes back, they will invest in the Indian stocks.

Q: Looking at the results so far and other trends, are you getting any sectoral preferences for Indian companies, like we know last year was the big year for Fast Moving Consumer Goods (FMCG) companies. Information Technology (IT) was ignored. Is there any such trend now?

A: I am afraid that on the infrastructure front I still don’t see any positivism coming in. Everybody is quite skeptical. Everybody thinks land acquisition, everybody still thinks that now things have to move in India and it is not just policy and nothing can dramatically change overnight. On the infrastructure side, I did not hear the noises and the signals. They are still very positive on India. On other sectors however, they are very positive.

Banking sector and we have a very large Banking & Financial Services Industry (BFSI) participation here. Almost 92-93 percent of all non-performing assets (NPA) banks where if you take the banks and the NPA 92 percent of the total NPAs are getting covered of the banks who are participating here and all of them unequivocally say that things seems to have peaked out as far as NPA is concerned. So that is a very positive.

Ofcourse, questions are being raised that is it sustainable because in Q4, there has been a dip and banks have shown outperformance in NPAs, but the question seems to be that is it sustainable? But all banks seem to be quite sanguine that it looks like the worst is behind us and we have topped out there.

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