Here is why StanChart Bank is underweight on India

Michael Preiss, Standard Chartered Bank in an interview with CNBC-TV18 said that recent rally in the global markets was a relief rally and the key headline risk from Europe has been postponed a bit with the Greek bailout package. However, one needs to see if second quarter earnings in the US are in line with the expectations, he added.

Standard Chartered Bank is still underweight on India and believes that money quantitative easing high oil prices has led to high input prices inflation and has negatively affected the Indian equity market. "Our view currently on India is underweight on three months and 12 months view. On global equities we are neutral because we feel that the risk reward ratio is evenly balanced," he added. Also Read: Market ignoring negatives, won't chase it now says Ambit Cap Below is the verbatim transcript of his interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video. Q: It has been a terrific global rally over the last 10 days or so do you see this continuing fueled by more risk appetite? A: I mean two things. I suppose the key headline risk about Europe has been a little bit postponed with the Greek bailout package. But I suppose the real issue to look forward to is the earnings season that starts in the United States next week. This is because we need to see whether second quarter earnings can live up to their expectation. But otherwise yes, it was a relief rally. We came to key support levels, market rallied sharply in anticipation, that yes the headline risk is significant but company profitability is actually quite robust. Do not forget that in this no world of European debt crisis of the US government potential debt shut down, certain companies are potentially safe for investment and certain governments. Q: How will market like India perform in this context you think? A: India unfortunately was with the law of unintended consequences. All this money printing in the west and quantitative easing for that matter has led to high input prices inflation and also very high oil prices which very much negatively affected the Indian equity market that is why we are still underweight India. However one could argue that maybe in India