The general mood has been rather positive over the past many days as far as emerging markets like India is concerned. Richard Gibbs, Global Head, Macquarie Securities says investors should use dips to buy into the Indian market. He sees the cheer returning to EMs and the tide turning in its favour.
However, overnight there was some sell-off in emerging markets such as Russia, Argentina and Ukraine too was under pressure. But Gibbs is not worried about the sell-off affecting the Indian market. He believes as long as India’s political scene remains on track, India should do well.
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Below is the verbatim transcript of Richard Gibbs' interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.
Sonia: In general the mood has been quite positive towards emerging markets like India, at least that is the opinion that we have been getting for the past many days. How are you approaching the Indian market particularly? Will you use every dip to increase your position in India or ahead of the elections because of expected volatility perhaps you would be a bit cautious?
A: The dips do provide an opportunity. We are starting to see that cheer in the emerging markets and the tide has gone up, the rising tide but now it is coming in terms of much more differentiated trading opportunities. The exchange rate for India is also providing some respite that as is concerned to that growth unabated with China and with United States, we will see interest rates relief coming through into the emerging markets and that has been driving positive sentiment in the last week or so.
Reema: Overnight we have seen sharp selloff in the emerging markets, the Russian markets were down more than 2 percent, Argentinean market, Mexico, they were all under pressure and we have seen tension in Ukraine as well, do you think the concerns over there will translate into weakness for the Indian markets well, just for the near term?
A: If the politics remains on track in India with the election campaign then that augurs well for the Indian market. When you look at the economies you have mentioned, most of them have some degree of political tension there and that is exacerbating issues on the structural side, so that is adding to the risk premium coming into play with those particular economies. So, assuming things stay on track in India and the policy start to remain consistently transparent then it will do relatively well against the other emerging markets.
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