Concerns about fisc, currency worrying FIIs: F&C Invest

Jeff Chowdhry, head of emerging equities at F&C Investments, tells CNBC-TV18 that foreign investors are concerned about India’s fiscal deficit and currency issues. “Until that is being treated in a meaningful way, I do not see much foreign institutional investment coming into India,” he added.

Equity markets across the globe capitulated today due to the global risk-aversion scenario. Indian equity benchmarks tumbled over 2% as global sentiment and macroeconomic issues weighed down on the market. Chowdhry says this weakness could continue for a few more days, but buying opportunities will re-emerge after that. “In the next week to ten days, we are going to get great buying opportunity again,” he said. Below is an edited transcript of his interview with Mitali Mukherjee. Also watch the accompanying video. Q: It is looking exceptionally bad for global equities today but a lot of it seems to be coming through on the currency front. What is driving sentiment and making it so weak and causing such a sharp fall across markets? A: I think it’s pretty obvious that we have got new elections coming up in Greece next month. That’s simply a referendum in terms of whether Greece wants to be in euro zone, and the elections next month will prove that. On the other hand, the meeting overnight between Merkel and Hollande, the new French Prime Minister, is indicative of the fact that there are some olive branches out there if the Greeks make the right decision, which is to stay within the euro. So that’s basically what is driving the markets at the moment. Q: In the near-term, do you expect to see a lot more by way of either fund withdrawal from emerging markets like India or do you think the worst of it maybe behind us, at least for the month of May? A: Today’s been a first day this year where we have had capitulation selling. We are seeing companies like Samsung Electronics, which have done very well, down 6% along with a number of stocks across the world. So this is the first day where we had long broad based selling. I would expect that it would probably continue for the next couple of days, but in the next week to ten days, we are going to get great buying opportunity again. Q: You have been an India investor and a watcher for a long time. How are you calling this market and what is it that you expect to see over the course of the next few months because we have already gone back all the way to where we were in December? A: I think there are two issues; first of all the global sentiment issue. Obviously everyone knows about that and we can talk about that, but there is also the fundamental issue. There are macroeconomic concerns that foreign investors have in terms of the fiscal deficit in particular, and until that is being treated in a meaningful way, I am afraid the currency will continue to be under pressure and I do not see much FII investment coming into India until then.