Aberdeen Asset Management’s Asia Managing Director Hugh Young does not see much downside from current levels for the Indian equity market given the relative strength it has shown when compared to other major markets.
Benchmark equity indices in India have fallen a little over 5 percent in 2022 so far due to the ongoing geopolitical tensions around Russia and Ukraine and prospects of aggressive interest rate hikes by the US Federal Reserve. That said, Indian equities have fallen less than some major markets like the US, France, Germany, Japan, and China.
“India has fared really well compared to the world but do not think we will be plunging into India. We will continue to look at stocks that offer suitable valuations,” Young told CNBC-TV18 in an interview.
The veteran emerging markets investor said that the actual fundamentals of companies in India and the rest of Asia are on a strong wicket but macro-economic uncertainties like the Ukraine crisis have led to a decline in valuations.
“We are still very comfortable with the earnings outlook (in India) for the next year or so,” Young said. Analysts on Dalal Street expect earnings of Nifty 50 companies to grow 19 percent in 2022-23.
Young said that he was bullish on ICICI Bank as the lender has turned itself around is catching up in terms of quality with peers Kotak Mahindra Bank and HDFC Bank. On IT stocks, Young said that they were neither cheap nor expensive.
Young also revealed that shares of consumer staple companies in Aberdeen’s portfolio had held back the performance given the general underperformance of the sector over the past one year. “It’s a reflection of high valuation and the potential of growth slowdown,” Young said.
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