FIIs find India unattractive, all eyes on budget now: RBS

With the European recession looming large, foreign investors are still no longer finding value in India. This is also because India has been one of the worst performing markets in Asia. Depreciating rupee too added to FIIs' woes. Between July and December, the rupee depreciated nearly 18% against the greenback.

Devesh Kumar of RBS feels that 2012 will not bring in any good news either. In an interview to CNBC-TV18, Kumar said that the market is likely to be remain subdued in the first half of 2012. He feels that all eyes are on the budget now and may usher in some triggers. According to him, some improvement in earnings may reflect in the later half of the year only after the Reserve Bank of India eases rates. In a departure from big gains in the past two years, investors saw around Rs 20 lakh crore of their wealth eroded as Indian equities tanked in 2011 because of inflation, high interest rates and the uncertain global growth environment accentuated by the euro zone debt crisis. Also read: Nifty may sink to 3800-4000, buy more in '12, says Sandeep Shah Below is the edited transcript of his interview with CNBC-TV18's Mitali Mukherjee and Sonia Shenoy. Also watch the accompanying video. Q: What is the RBS view going into 2012? What kind of targets are you setting on the Sensex? A: I have been meeting a lot of people. At the beginning of December, we had our conference in Singapore, Hong Kong. The sense we are getting is that international investors before committing more money they would like to see some more developments on the ground. They are keenly watching India, but yet not sure whether they should be coming in. When we look at local situation also, if you look at domestic institutions, the inflows are not strong enough. With all that, we feel the first half of the year is going to be lacklustre, range-bound market. In our view, most of the worst fears are priced in, but some more downside remains with the market in first half. In the second half, we will see a gradual build up mainly because of macro economic numbers and monetary side showing encouraging signals. As we go into the New Year, in the last session of Parliament, whatever economic actions were expected didn