India likely to strengthen going forward: Richard Harris

India is likely to strengthen going forward, says Richard Harris, chief executive, Port Shelter Investment Management. However, he says, the rise is going to be more muted than it was in December and January. 

Global markets, he says, are likely to see a rally, maybe in couple of months. "I also think it is going to be limited, it will be more of a relief rally and we will see reality coming to the market perhaps come the autumn," he adds. Also read: Indian economy isn't broken, can be fixed in a year, says KV Kamath Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: A lot of hopes are being pinned now on Thursday, when the ECB and the BoE will be meeting. If assuming a scenario that we will just get 25 bps rate cut from the ECB then how do you expect the markets to react, have they already factored that in? A: I think they probably have factored in around 25 bps. But I still think it would probably be taken as quite good news. My feeling for say the next couple of months is quite positive in Europe. Q: The hopes are also rising about probably the US Fed getting into a more dramatic easing mood after the data coming in worse; China is expected to do the same perhaps with reserve ratios. Will all this mean that the rally gets even better than the January-February rally that we saw? A: I am not sure I would go that far. But clearly the bias is down everywhere because it looks as if manufacturing is coming off in the United States and in China. So, it is not entirely good news. I would see more as a relief rally rather than being a rally due to good news because I think we still have a lot of issues out there. The decline in the activity in the economy, especially in the US is a little bit disconcerting. The US quite frankly has been holding up the world for the last 9-12 months. Ofcourse it does hold up China as well. If the US slows and China will slow, Europe is already slowing with austerity so that will impact China. So, I think the growth picture is still looking quite difficult around the world. That means that we are likely to see a rally, maybe in couple of months. But I also think it is going to be limited, it will be more of a relief rally and we will see reality coming to the market perhaps come the autumn. Q: Apart from the rate cut, is there anything else, any other announcement that we could realistically expect? A: At the moment, all policy makers around Europe are thinking of things to do. I think that you are also going to see some political pressure on the government in the UK to maybe start looking at easing and further growth measures. I don’t think that is the right thing to do, but I would suspect they will see that happening. So, I think that we are going to see a series of measures coming out of policy makers that are quite conducive to growth. But don’t forget that these are reactions to news that is coming out of the economy. I think it is going to provide the headwinds. If you look at the end of the year, we are coming to some quite instinct factors, the US elections, possibly real slowdown in the market. I think we could easily end up the year pretty well at levels where we are now. But in the meantime, I like to think we are going to see a bit of a rally. Q: What about crude? A: I just see oil prices come back from here. We are going to continue to see austerity in Europe. We are going to continue to see a slowdown of a very high growth rate in China and the US too. So, I think again the bias on the oil price is probably downwards. We are probably going to see bias downwards in oil rather than up. Q: In this relief rally that you are expecting, which emerging markets could benefit? Would you be buying India, how much more gains would you see? A: Emerging markets like it, when the rest of the world is going up. We get hurt more when there are problems in the western world. I would say this about India that we shouldn’t be too greedy. India is one of the markets this year in 2012 that is actually up, a reasonable amount. I would certainly think that India is likely to strengthen as we move forward because sentiment around the rest of the world probably will be slightly more risk-on than we are now. But the rise is going to be more muted than it was in December and January.