Geoff Lewis of JP Morgan Asset Management retains his optimism over India, and has cited ongoing political changes as one of the key drivers. He does not expect the rupee to weaken significantly from current levels.On emerging markets in general, he says they will continue to react to cues from Wall Street.
Globally, investors appear a bit anxious as they are not certain about the US Federal Reserve's course of action on its monthly bond purchases. The minutes of the latest Federal Open Market Committee suggest that most officials see decrease in bond purchases as the first step towards normalization of monetary policy.Also Read: Betting on large cap IT, vice industry, pharma: Axis CapBelow is the verbatim transcript of Geoff Lewis' interview on CNBC-TV18
Q: It has been quite a muted reaction for the US equities when the Federal Reserve chairman statements came out or the minutes came out but there was more of a formidable reaction that came into the treasuries as well as in terms of the dollar index, is that the trend we could possibly expect going into 2014?
A: Yes, tapering should never have been such a significant issue. It is very minor and now that the Fed has successfully communicated its forward guidance message that interest rates will stay low for quite sometime then I think markets will easily accept it. As the tapering progresses at each FOMC meeting and the monthly purchases come down USD 5-10 billion even, I don't think that will any longer be significant news as far as direction of the market is concerned
Q: It has been a very difficult start to 2014 for most of the emerging markets led by India. Is that something that you would read as a near-term trend that there will be weakness and lack of momentum in the emerging markets?
A: I think emerging markets will be taking their cues to some extent from Wall Street and we have seen a weak start to the year. I don't believe if the stock market falls on the first trading day of the year, it will be down through the calendar year. It is not surprising given that the strong run-up on Wall Street towards year end we have a bit of a consolidation now. The US economic surprises have picked up. It tends to be a fairly short cycle in terms of surprises in the data. It could be the turn for some other regions to show better data particularly if Asian exports pick up.
Q: What is your view for India in particular and how are foreign institutional investors (FIIs) approaching India?
A: I have remained optimistic, I have always thought the sell-off last summer was exaggerated. India's trade and current account deficit were on the turn than anywhere. FII money has since picked up and come back to India and in local currency terms, India was the third best performing market Asia ex-Japan last year. So, I am still positive particularly with the recent political developments. The wins for BJP in three important states and the increased chances of an NDA government forming would be seen as more pro business or more energized perhaps and more keen on further economic reforms. So from that point of view, I would expect the market to do quite well in the first half in India.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
