China's belligerence vis a vis the West, and the US in particular, has triggered a bull run in India, Marcellus Investment Managers founder and chief investment officer Saurabh Mukherjea said in an interview to Moneycontrol on June 19.
Foreign investment in India should double in the coming three to four years, largely aided by China's conflict with the US resulting in outflows from the world's second-biggest economy, he said. China has $3.3 trillion worth of foreign investment and India only $500 billion. This was set to change and money would go back to the West and eventually re-routed to India, the Marcellus' founder said.
There was a sense of panic among the institutional investor fraternity in the US to pull money from China "as soon as possible" and invest in India fairly urgently, Mukherjea said. The quantum of money in China was colossal. Even if foreign institutional investors invest $100 billion in India each year, they would have only pulled out a seventh of the money from China.
Recently, Goldman Sachs and multiple institutions trimmed China's economic forecast after data showed that recovery was faltering. Retail sales and industrial output missed targets in May. The government has an achievable GDP growth target of around 5 percent for this year after missing 2022 estimates.
Also read: China credit data shows signs of economic slowdown, says Jefferies
Speaking about the market rally, Mukherjea said while central banks such as the Reserve Bank of India (RBI) and the US Federal Reserve had been raising interest rates, the two economies seem to be doing very well. India's economy growing at 7 percent despite a cumulative 2.5 percent rate hike is "remarkable", he said. The economy is in cruise control and the next two-three years should be a stellar bull run, he added.
The RBI in its two policy reviews of the financial year 2023-24 has left the rates unchanged. On June 8, the central bank left the repo rate unchanged at 6.5 percent but said it will keep a close watch on prices.
A few days later, the Fed, too, hit the pause after 10 successive hikes but signalled more tightening ahead as inflation remains above its target of 2 percent.
Mukherjea said several sectors were witnessing major changes. The pharmaceutical industry, dominated by China, was seeing a gradual shift. China currently makes 60-70 percent of global pharma products, and India's market share in the current scenario was close to 10 percent.
After the covid outbreak that led to supply chain disruptions, many countries in the West talked about finding alternatives to China and also supporting the pharma industry at home.
The Nifty pharma index has outperformed the benchmark Nifty by 285 basis points since the start of 2023. One basis point is one-hundredth of a percentage point.
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