Global investors are keen on policy measures with significant impact on the ground that will boost investor-sentiment says, Jeff Chowdhry, head- emerging equities, F&C Investments.
In an interview to CNBC-TV18, Chowdhry adds that the QE programme will be tapered only if US economic growth is strong, which is unlikely to occur. Below is the edited transcript of interview on the CNBC-TV18 Q: On the one hand, India's has internal problems while on the other hand, it seems like foreign flows will become very scarce. What is your view on the dollar-rupee?
A: There has been a sell-off in emerging-market currencies. This year, the Indian rupee along with the Brazilian Real, South African Rand and a number of other currencies have depreciated. So, its not just been a domestic Indian problem but an an international issue that relates to tapering of the QE by the Fed.
Though the market has become obsessed with tapering, tapering will only occur only if the US economy is strong. If the US economy hits a soft patch, there is little likelihood of tapering in the near term and that will take the pressure off the currency.
So, US bond yields approaching 3 percent is a big bounce and I suspect US bond yields will probably ease off a little bit and that will take the pressure off some of the emerging-market currencies, including the Indian rupee. Q: Will there be a significant increase in outflows from emerging-market equities?
A: Investors participating in the debt market and in equities have slightly different perspectives in terms of timeframe. Debt investors tend to have a much more shorter timeframe whereas equity investors have much longer timeframe.
Though outflows continue from equity, longer-term investors are here to stay and will invest more money in the market, going forward. Q: How are global investors approaching India now?
A: Global investors are keen on some real measures from Indian policy-makers. The measures announced on Tuesday by the RBI did not significantly change sentiment.
What is needed are measures that would give some incentive for people to put money into the market.
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