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Interview on Investing in India
BBC World News: Paul Parambi shares his views on investing in India
Transcript of the above video
According to the experts, foreign investors who were the biggest sellers in the markets, upto a year ago were the biggest believers in Indian shares. What went wrong and when are they likely to return, these are the questions posed to Paul Parambi who heads the international operations of Kotak Group and manages over USD1.5bn of foreign funds.
Paul – To see some of the investors coming back, what you require is a couple of things. Clearly there has to be some stability in India and Indian markets. Investors shouldn’t be seeing the markets going down on a day on day basis. Once they see that stability, then we should see the confidence that could return and some monies could start flowing in as the fundamental levels are particularly attractive at this point of time.
What are your international clients telling you at this point of time? Are they worried or nervous about the way the Indian markets are playing out?
Paul - Investors are not really worried about India. It is the fear of investing. See, if you are an investor with USD100 and if you’ve lost USD70 of those in various investments you’ve made across the world, then you would try and preserve the balance USD30. This is what I mean by ‘fear’. In that kind of a mode you retract and try and preserve capital. So it’s not specifically the fear of India. Of course having said that, if the Indian markets keep dropping on a day to day basis and we see significant volatilities, then that makes matters worse.
Where do you think the bottom of the Indian markets is at? Have we reached the bottom or is there further to go?
Paul - Looking at markets today, it is difficult to call it the bottom. But what I can say with some confidence is that if I were an investor with a 3-5 yr horizon and if we were to see the downside then it could be 10 or 15 or 20% max but the upside the markets presents, clearly weighs in favour of taking risks.
But, there are a number of economic and corporate challenges coming up. We’ve already seen export levels come down and the corporate earnings are not likely to be as good as they have been in the last few years. Is that going to affect the growth in the Indian markets?
Paul - It is to be expected that over the next one to one and a half years, earnings growth would be subdued. It would be in this year in the mid to low single digits and next year high single digits to low double digits which is relatively low compared to the past. But clearly it is the time to get invested than to wait for all this return.
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