Investors cautiously optimistic on India: BNP Paribas

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BNP Paribas recently held its conference in India in the first week of March. In an exclusive interview with CNBC-TV18, Praveen Chakravarty of BNP Paribas Securities, speaks about the conference.

Here is a verbatim transcript of the exclusive interview with Praveen Chakravarty on CNBC-TV18. Also watch the accompanying video.

Q: I understand that the thrust of your conference was on policy initiatives in India. Can you take us through what kind of policies you are attending investors were more focused on? Did they have to do with macro policy like reining in the fiscal deficit etc or micro level policy, individual sectors?

A: If you step back and look at what happened in May 2009 when the new government got elected that was the big step-up in the move for the markets and since then the markets have been on a secular upward trend. So it was important to take a step back and take a look at, 'why did the markets go up?' Clearly, there was a lofty expectation from the stable government after very long period of time. When we went around and asked our clients and this included chief investment officers of various large foreign institutions, their big question was 'is it now time for India as a country to turn a hockey stick in terms of its policy initiative?'

So to answer your specific question whether this was macro or micro or monetary, it holds a combination of all of it. The goal of the conference was to take a step back and help foreign investors understand and gauge, 'whether this government where the expectations were very high, can they deliver?; What is the progress that has been made? Is India finally getting its act together?'. So it involved everything from geopolitical risk in the subcontinent to talking about schemes like Jawaharlal Nehru Urban Renewal Mission and the projects that are been awarded under that scheme. So it encompassed the entire system.

Q: Can you give us a sense of what kind of participation you had going at the conference, just to understand whether these were traditional India investors, long-only guys, new investors into India?

A: Because the conference was structured more from a macro politics policy perspective, the investor attendance was focused more towards chief investment officers, predominantly foreign institutions that are about to make a big call on whether they should structurally be increasing their weights in India. They may have been India investors, they may have had smaller holdings. But these are traditionally CIOs of large foreign institutions that wanted to get an answer to this question, 'over the next three-five year timeframe, should we be structurally increasing our weights in India or not?' So that was the profile of the attendees.

Q: What general sense you got from them? From the election result up until now including the Union Budget, are they happy at the pace of change that they are seeing, given the kind of expectations which came to the fore when that electoral result was presented?

A: If I were to sum up in two words, the mood is one of cautious optimism. Optimism because I think they heard all the right things, I think nobody that was present at the conference, at the end of the three days doubted the intend of the government for reforms, doubted the intend of the government to attract foreign inflows. Caution because what is unsure is the pace at which this would get executed. So it was certainly a mood one of course is optimism.

There were quite a few investors, the European investors at large that personally came and told me that they heard all the right things, they were very optimistic about India. But they also had all these questions about, 'is it true that they take very long-time for reforms to happen? is it true that they take very long-time for policies or schemes to be implemented in India?' So if you kind of look at it, yes the pace is something that nobody or the timing of these things nobody can put a finger to, but they heard all the right things though at the conference and that's the sense I got from them.