Underperformance of Indian market a short-term hiccup: Geoff Lewis, Manulife AM

Talking to ET Now, Geoff Lewis, Manulife AM, says as the economy and GDP growth seem to be pretty much on track, there is no major trend in the current underperformance by the Indian market.

Edited excerpts:

Would it be premature to assume that perhaps the worst in the carnage that played out in the metals market after the tariff hike in the US, is behind us now? Is that pain already in the price?

We are waiting for the report of the US Trade Representative on intellectual property rights to be acted upon within the next couple of months. The trade issues have clearly not gone away, this is just the first round.

But if people look at it rationally, if you look at the whole post war history, there has never been an occasion when raising tariffs has ever had a significant negative impact on the global economy as a shock.


Throughout that period, tariffs have come down and there have been trade restrictions on a selective basis. One should be a little bit calmer about this. The bigger risk is the general deterioration in relationships between the US and China and a possible lack of trust. Investors have realised that this tariff move is not going to derail the global economy. The jobs report was an absolute standout. This shows that the US economy is performing very well indeed and that should be more important for investors.

Why is India suddenly underperforming not only developed markets but other emerging markets as well? Is this simply routine correction in a bull market or has the India positioning changed somewhere?

That is a very good question. One thing you could perhaps point to is that the earnings revisions over the last few months have not been particularly favourable for India. India has had the second largest negative revisions after Korea. The consensus earnings for this year is down a fraction of a 1% on the three months’ basis whereas the region has seen a slight positive revision. It could be because when you had a correction coming, investors began to think which are the markets that are expensive and of course India has traditionally been expensive. So that could be a reason also.

We see these short-term reasons. As the economy and GDP growth seem to be pretty much on track, we would not see this as pointing to a significant major trend in Indian underperformance, may be just a short-term hiccup.