Indian market is very expensive: Feriani

Excerpts from Bazaar on CNBC-TV18 Watch the full show »

MD and CIO of Progressive Asset Management, Slim Feriani believes that India is more expensive than other emerging markets but it is a strong economic and earnings growth story.

He further adds that India corrected by 30%, more than other emerging markets. He also says that strong corporate earnings could bring more inflows from sidelines.

Feriani favours India's growth and structural changes. He feels that valuations, fiscal and external positions are a cause of concern for Indian markets

Excerpts with CNBC-TV18's exclusive interview with Slim Feriani:

Q: How have you read the pullback in markets such as India and what is the call on it now?

SLIM FERIANI SAYS:

-India is trading at 50% premium to other emerging markets -India corrected by 30%, more than other emerging markets -India is a strong economic and earnings growth story

A: Generally speaking, the pullback was quite sharp. For emerging markets, the MSCI benchmark that we look at from the recent peak in early May to the rough one in mid June, the correction was about 25%. That was a severe correction but it was healthy given how stretched the valuations were towards April end.

India was among those markets that did have a pretty strong run for the last couple of years including this year until the end of April. India corrected a bit more than the aggregate emerging market correction. India corrected a bit over 30% on the MSCI benchmark and what happened was that the BRICs market corrected a bit more than the aggregate because they all went up a bit more.

In India, we have seen quite a run as markets have gone up by double digits and India has actually gone up by 20% in the last ten days or so. So we are seeing that investors are coming back into these markets.

Q: Is this coming back for real or will we see a bout of selling again?

A: Generally speaking, in the case of emerging markets, we think that it is happening a bit too quickly again and that is reflective of the liquidity that is sitting out there globally, waiting to get into emerging markets for the long-term. We hope that some of that money is certainly long-term but one of the reasons for this recent correction is really the hot liquidity, which left as soon as there were signs of correction.

Q: Regarding lot of money sitting out there waiting to come into emerging markets, what can keep them away and where else can they go and what can suddenly look attractive?

A: We will have to think that emerging markets are the most compelling story for the next couple of years. But India, we think, is the most expensive among emerging markets and so we do not believe that most of that money should go into India because at the end of the day, valuation is key and Indian market is very expensive.

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