FIIs positive on India, see more upside: JP Morgan AMC

As India is showing signs of recovery, foreign investors seem to be interested in the Indian market once again. Richard Titherington of JP Morgan Asset Management feels that foreign institutional investors (FIIs) are positive on India as government is moving in the right direction.

In an interview to CNBC-TV18, he said, "I think it is a very positive sign that some movement by the government in what is interpreted as a market friendly direction. I think that India is moving in the right direction and I think equity mkt investors, particularly foreign investors will continue to react positively."
Titherington is fully invested in the market as he sees more upside.
Continuing his optimistic stance, Titherington is expecting 2013 to be a better year for emerging markets (EM) equities. He also sees China and Russia to lead the recovery in 2013.
At the same time, he adds that investors in Europe are fairly cautious about the growth. Also read: Nifty may see 6000-6100 in Nov series says Angel Broking Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy. Q: What is your view on India after observing the policy announcements that has come through over the last 3-4 weeks? A: I think the outlook for Indian market depends on whether the government is able to stick to some of the reforms that they have announced recently. It is a positive sign that some movement by the government in what is interpreted as a market friendly direction saw a pretty vigorous positive reaction from the markets. I think India is moving in the right direction and equity market investors, particularly foreign investors will continue to react positively. _PAGEBREAK_ Q: Do you see emerging markets (EMs) outperform developed markets for the rest of the year and the start of 2013? What would your pecking order be within the EMs now? A: Emerging markets equities have had a tough time over the last 12 months in terms of relative performance. I would expect 2013, to be much better for EM equities relative to developed world as profit growth recovers. And I think the markets that will lead the recovery in the EM will be China, India and Russia. These three markets may be the key out performers over next 12 months. Q: How has your experience been with fund flows into the funds that you manage? Have you seen a lot of money coming into the EM funds? Is there interest in markets like India in terms of fresh flows? A: When you talk about fund flows, I think it is fair to say that retail investors, particularly in Europe are still pretty cautious. We have seen positive inflows from institutional investors, both pension funds and sovereign wealth funds. So I think the overall outlook for fund flows has improved and we have seen a pick up since recent the central bank interventions. But I think generally around the world, retail investors are still pretty cautious. _PAGEBREAK_ Q: When you talk about caution what is the biggest headwind for a global investor now, is it peripheral Europe where no solution is being reached to their debt problems or is the looming fiscal cliff over the US markets? A: I think the biggest single concern for global investors at the moment is the outlook for economic growth. Whether you are talking about Europe or the US or the EMs, there is a feeling that growth is either not picking up as fast as people would like or is slowing down. At some point investors worry that it’s bound to impact corporate profitability. Q: Do you think after the good run that we have seen this year there could be a move for profit taking in the last couple of months of the year, given some of the issues that you mentioned? Could we be entering some kind of a mild corrective phase? A: I don't think that it will be right to say that global equity markets are in a corrective phase. Clearly you will see selected profit taking in some areas where markets have gone up a lot in recent months. But the central bank easing has done a lot to change the overall investment atmosphere in a much more positive direction. I think the outlook for equities remains pretty good. Q: What is your view on the right portfolio approach at this juncture? Should one be completely invested or take some money of the table? A: I would describe my attitude to our portfolios as cautiously optimistic. I think in general equity valuations cheap. Clearly there are a lot of global macro factors to worry about but my inclination is to remain pretty fully invested because I think markets can continue to go up quite strongly if we remain in this relatively benign environment that we seem to be in at the moment.