Indian rupee at current level is a strong buy: HSBC

Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

Discussing the Indian rupee, Preiss says "In the long-term, most people would agree that Indian rupee at the current level is a strong buy and it helps in furthering the argument about long investments in India."

Excerpts from CNBC - TV18’s exclusive interview with Michael Preiss:

Q: How have you read the fall that has come into emerging markets and India in specific?

A: It is quite interesting especially with the speed of the decline. When you see this, the friction is not much about India or the emerging markets, the friction is much more about US monetary policy and the weakening of the dollar, which is to some extent driving it.

Here the news says "India’s economy expense is 9.3%," while at the same time, the market was down by 600-700 points. So it shows you that the fundamentals are strong. In the short-term, there is a lot of uncertainty, not just in India, but the global financial market. So it has nothing to do with Indian fundamentals.

Q: What is your sense when you talk to some of your colleagues and other peers in this space? Do you get a sense that the redemption pressures, which have started a few days back, might intensify even more, going forward or are we through with most of those?

A: I think it is good to intensify a little bit more because a lot of people feel that it is safer to have cash because once the market rebounces, you have at least some cash to go long again.

Last couple of days have shown that trying to bottom fish is very dangerous. A lot of people try to do this and hence a lot of people are sitting on more losses again, a lot of people are selling across the board. So to some extent, it is also panic-driven selling, I presume.

Q: Is the redemption pressure the same across emerging markets because we were collating the data and we are second only to Russia in terms of how hard the fall has been this month?

A: Russia and Brazil for that matter have had the redemption pressure. But China on the other hand is holding up surprisingly well. But India in long-term, will do well.

Q: What do you expect to see from these funds for the next month or so? Tactically, will they just sit it out or will they start buying, if they see lower levels?

A: For the time being, a lot of people are still very much on the sidelines. Yesterday we saw the appointment of the new US treasury secretary. the question is, is US now endorsing a weaker dollar policy or basically reterating a strong dollar policy?

Hence, for the time being people think it is better to book profits and go into cash. Cash in the sense also means euros and not just dollar because dollar is weakening across the board.

Q: Sticking with the currency, how much of a factor is the rupee versus dollar because that is weakened quite considerably in the last few weeks? Do you think it could be an added factor, which is worrying the global funds in India specifically?

A: In the short-term, yes. But in the long-term, most people would agree that Indian rupee at the current level is a strong buy and it helps in furthering the argument about long investments in India.

When you look at the news that the economy grew by 9.3%, you got to know that the fundamentals are too strong. The financial markets for the time being are a little bit irrational, but also look at the technical picture - rupee at 46.32 seems to be very good entry level.