Prime Minister Narendra Modi is a great brand ambassador for the country and high P/E is a reflection of that strength, said Sandeep Tandon, chief executive officer and director of Quant Capital, in an exclusive interview with Moneycontrol.
Highlighting the success of the G20 summit, which was recently held in India, he said the country has entered a different league. “The way earnings expand, the multiples can also expand. When globally, countries are not doing well economically, the money will shift towards India. We are very constructive on Asia-centric emerging markets specifically India,” he said.
Talking about the shrinking liquidity and risk appetite of the developed markets, he said that money is shifting to Asia and specifically India.
“The risk appetite for the developed market peaked in September 2021 from a longer-term perspective. Liquidity is shrinking in these markets and ultimately the money will shift. So if we combine the risk appetite and liquidity data, the analysis shows that the money is shifting to Asia. And if 8-10 percent of money shifts to Asia or India then there will be a tsunami out here.”
Tandon further highlighted India’s globally growing stature and believes that value stocks will deliver better returns in the long term. “The world’s perception of India has changed and the overall picture is improving. So one should not be in a hurry to book profits. This decade belongs to value as a thesis and within it, emerging markets qualify. So in India, the value stocks will deliver better returns,” he said.
In December last year, the Economist Intelligence Unit in its Asia Outlook 2023 report said that the Bharatiya Janata Party’s dominance makes India a stable hub for investors, and a favourable base for manufacturers seeking to be less dependent on China. The BJP’s dominance is directly related to stability because it ensures policy continuity for a longer period of time.
Earlier this year, Goldman Sachs said in a report that India will surpass the US to become the world’s second-biggest economy by 2075. According to the brokerage, India will surpass the $50 trillion mark by 2075. On the same lines, Morgan Stanley last month also upgraded India’s rating to ‘overweight.'
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