Optimistic, but not overweight on India: Steve Brice

Steve Brice, chief investment strategist, Standard Chartered Bank, says that people are getting increasingly optimistic that a fiscal cliff deal will be struck. We are neutral on India.

Also read: FII flows to continue; cautious on sectors: Credit Suisse Below is the edited transcript of his interview to CNBC-TV18. Q: We have seen exceptional flows even though historically, December does not pull that much money. What are you hearing about flows and whether they are picking up for this tail end of the year?
A: The macro backdrop is very critical. People are optimistic that a fiscal cliff deal will be struck. There is significant gap between the Republicans and the Democrats on this. I think it will be resolve, but it will take some time. In the short term we are a bit concerned about the outlook for the markets.    
We have seen a strong rally after a bit of a sell-off a couple of weeks ago, but we feel times are challenging in the immediate future. We are more bullish on the longer term, but we feel that some downside risks are now increasing for the immediate future. Q: How do you approach India, specifically as a market?
A: We are still neutral on India within a global asset allocation framework. We are becoming increasingly constructive. At the beginning of the year people were pessimistic abut India but now they feel that they have priced in lot of bad news and the government seems to be taking some policy action, the underlying fundamentals are very positive. There will be more exposure to the Indian market over a period of time.
We have placed India above Malaysia and Taiwan. We still feel that there is better value in markets such as China, Korea and Thailand where the valuations are a lot more compelling and we do see very strong signs in China at least of the economy turning around and liquidity situation improving.  We are optimistic on India but not overweight.