TINA factor to work for Indian equities? Certainly, say experts

NEW DELHI: The momentum money may be flocking to China, Brazil or Russia, but it is India that promises long-term growth on a sustained basis, Sukumar Rajah, MD & CIO - Asia Equities, Franklin Templeton, told ET Now.

He did not rule out some amount of cyclicality, but affirmed that India is still one of the strongest stories within the emerging markets. So, a TINA (there is no alternative) factor may well be in the works for India.

"Many emerging markets are not going to see sustained improvement, growth and fundamentals as India will see. So, to that extent, the interest in India is likely to remain elevated and it will still be one of the favourite markets from a medium to long-term point of view," Rajah said.

Therefore, despite the recent correction and rotation (of funds), he said, he had no doubts that India will see a lot of interest, “provided we do not create an environment to distract the investors.

Further, investors have to be wary of the returns from the stock markets this year, and need to temper their expectations.
The stock markets had run up nearly 40 per cent after Narendra Modi came to power last year on expectation that reforms would be hastened, and infrastructure bottlenecks removed.

Rajah, therefore, believes that the upmove in the markets has to be led by a continuous recovery in corporate earnings.

Saibal Ghosh, Chief of Investments & Business Development at AEGON Religare Life Insurance, too, said that there might be some pull back-effect on Indian equities, but for investors chasing growth, there are not very many alternatives to India at this point.

“I believe that there will be some pull back effect for sure as emerging market funds are hugely overweight on India (to the extent of more than 400 bps). Besides, holding of all FIIs put together is reaching half of the entire free float available in the market. But I also believe that equity investors finally chase growth and there is not much alternative to India in the globe at this point," he said.

Some other experts also believe that India's long-term story remains intact, and advise buying equities on dips.

“The growth story in India is strong and consistent, and the Indian markets are in a structural global bull run. So with that background, India is poised to do well,” says D K Aggarwal, CMD, SMC Investments and Advisors Ltd.