European debt crisis could benefit India: Sajiv Dhawan, JV Capital Services

In a chat with ET Now, Sajiv Dhawan, Managing Director, JV Capital Services, talks about the debt crisis in Europe.

How much do you think the European problem could actually escalate because just last night we had the S&P issue out warning to Greece in terms of their bank plan?

Well things are pretty bad, you can read in the papers that FTSE is up, it is above 6000, the DAX is above 7400. It seems to be ignoring the actual reality on the ground. Yes, people were doing well in a city, etc., and they are fine but in the real economies are in a big problem.

In Greece, it is just delaying the inevitable. The IMF or the World Bank’s and European Bank’s are delaying and giving them money because they do not want their banks to fail. You are so stuck in a vicious circle where the bailouts will continue, it is a real problem for the people who are living in those countries at the moment and there is not much confidence. Frankly, anything can happen at anytime, it is a just a question of papering over the cracks by throwing extra money at the system.

Now in a way that could benefit India after an initial knee jerk reaction because here despite all the bad news, despite all the negative headwinds you still have 7.5% plus growth, despite all the bad news we have had over the last six months the Nifty hardly fell. It is 5300 but not a disaster it could have easily slipped to 4500-4800 levels by negative news flow we had.

From that perspective, I think after things calm down even if they are in negative reactions India will be a big beneficiary, you have got high interest rate which will obviously attract lot of NRI money into the country as well. So Europe remains a concern but at the moment if you look at the financial markets no one seems to be too concerned at the moment.