India looks better against other EMs: Birla Sun Life

Sashi Krishnan, CIO, Birla Sun Life Insurance shared his views on global markets and the Interim Budget.

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Below is the verbatim transcript of Sashi Krishnan's interview with Ekta Batra and Reema Tendulkar on CNBC-TV18.Q: I was looking at the foreign institutional investors (FIIs) stats and the Nifty movement that we have seen in the past couple of trading sessions itself. We have netted around Rs 1,200 crore in terms of FII inflows in just the past three consecutive sessions, do you think that something has turned post the Vote on Account (VoA)?A: Specifically talking about the VoA, there was nothing significant. If you look at the underlying trend in it, there were only two things that struck me. One was fiscal consolidation, the message that there will be significant effort to bring about fiscal consolidation and two there will be a greater impetus towards moving the industrial sector. So beyond that, there was not too much.So I don’t think the VoA has significantly turned why FIIs have put in money into India. If you look at it from a longer-term perspective, I would think that there is some allocation that is happening to emerging markets (EMs). Among those EMs, India still looks better than some of the markets like China where you have seen a big slowdown especially with the latest purchasing managers’ index (PMI) numbers and some of the commodity exporting countries, which are under pressure.The currency has held out significantly better in India than the currency has held out in a lot of other countries especially in EMs. If you put those two underlying themes together, the fact that Indian currency has held out and India looks better from macro perspective than a lot of the other EMs, you will see some allocations coming to India.

Q: We all know that the big trigger for the market will be the elections a few months later. The big question that everyone has is how do you play the markets in the run up to the election? We do not know what the outcome will be but just for the next few months till the elections, how should one approach the markets? Is there a possibility for pre-election rally and therefore should we look to buy at current levels or it is just an avoid given the uncertainty?A: The first thing I would like to say is that politics in the long run - it is not a danger to equity markets or any asset markets. Therefore, though the underlying negative at this point of time is politics, as investors who are bothered about staying invested for the long-term in Indian equity and the Indian markets, we should not take too much cognizance of all this noise that is happening.