Investors more optimistic on India now: JP Morgan AMC

Management believes the US has avoided the dreaded fiscal cliff and the Eurzoone too looks much better right now. He is optimistic about 2013 and expects investor take more risk on India than last year.

Also read: Indian consumers cut discretionary spending: Credit Suisse I would not expect a lot of flows in the short-term (for India), but in the longer-term, one will see money coming into the market," he told CNBC-TV18 in an interview. Below is the edited transcript of his interview to CNBC-TV18 Q: We have got lots of flows in the last few months. Do you expect to see this risk-on phase continuing through the better part of 2013? A: We have avoided the US Fiscal Cliff and the outlook for eurozone is better. Clearly investors are in a mood to take more risk at the beginning of this year than they were at the beginning of last year. I am pretty optimistic for the outlook for 2013. Q: Bulk of those flows has come into India as a market. How are you approaching India now? A: I think clearly when you look at China, the depth of worry about the economy was three four months ago. People are more optimistic with the new administration. The latest economic data seems more favourable. There is a little more uncertainty around the outlook for India. The government has been making some very positive noises recently. Generally people feel a little bit more optimistic about India now than they did 12 months ago. Q: What is your call on India? A: India is not at the front of foreign investors' attention right now. People are more focused on China. So, I would not expect a lot of flows in the short-term, but in the longer term one will see money coming into the market. Q: Do you expect more positive announcements in the run up to the Budget from the government? A: Certainly the Finance Minister is making a lot of positive noises. He has been traveling around the world seeing investors recently. He is putting forward a very positive message. So yes, the government is going to try and be more proactive in the run up to the elections. Q: What is your general view on how one should be tactically positioned for 2013 now for global equities? A: I am quite optimistic on the outlook for global equities. Valuations are in general quite attractive and risk appetites are improving. The global economy will look better in 2013 than it did in 2012. There is some evidence that money is starting to flow out of bond funds and into equity funds. Against that there is a degree of complacency about some of the structural issues in Europe and Japan. There are still lots of risks out there. So, investors should be owning equities, taking more risk now than they were prepared to take 12 months ago. However, they should not be ignoring some of the clouds on the horizon. Q: In terms of big cues or triggers what would you point out for the global screen? A: The key event that all investors need to focus on is when the Federal Reserve starts to raise rates in the US. The market thinks that is not going to happen in 2013 and maybe not even in 2014. If that is right then the outlook for equities is very positive. However, if we are surprised and the Fed raises rates quicker than that, then it will be a problem for equity markets.