FIIs find India safe despite Satyam fallout
Investors are currently neutral on India compared with their negative outlook 6 months ago. Gainers: BSE ( A, B ), NSE | Losers: BSE( A, B ), NSE | 52 Wk: High, Low
By ET Bureau |
MUMBAI: Portfolio investors are currently ���neutral��� on India compared with their negative outlook six months ago. They were primarily concerned about high oil prices, said Aditya Narain, MD and research head of Citi Investment Research. Though he believes that a speedy bounce-back in the real economy will be difficult, he predicts a lower current account deficit ��� less than $10 bn ��� for FY10, thanks to low oil prices.
Mr Narain described his outlook on India, the economy, and the future of the IT industry. ���2009 will see the real economy���s excesses being unwound. There will be pain, but policy-easing and low commodity prices are setting the stage for a pick-up in FY11,��� he said. Citi has been ���underweight��� on India over the past two years.
Commenting on the Satyam issue, he said it would have a limited impact on institutional outlook as regards India or the IT sector. ���The reaction will be restricted to that stock. Yes, it is a disappointment, but there have been instances of fraud in many markets for some time now. All it has done is to make investors more vigilant. Now, the approach is more stock-specific,��� he added.
While Citi has discontinued its coverage on Satyam, it did have a ���buy��� recommendation before the scam broke out. ���It was a ���buy��� in terms of valuations,��� he added. Interestingly, more than 50% of Citi���s India equity recommendations are ���sell���.
Mr Narain said: ���The India offshore story will slow down. But within that, one will see a shift to quality. Our call is that India will see more business coming out of this. However, we need to see some stability for entities to take informed decisions.���
Mr Narain described his outlook on India, the economy, and the future of the IT industry. ���2009 will see the real economy���s excesses being unwound. There will be pain, but policy-easing and low commodity prices are setting the stage for a pick-up in FY11,��� he said. Citi has been ���underweight��� on India over the past two years.
Commenting on the Satyam issue, he said it would have a limited impact on institutional outlook as regards India or the IT sector. ���The reaction will be restricted to that stock. Yes, it is a disappointment, but there have been instances of fraud in many markets for some time now. All it has done is to make investors more vigilant. Now, the approach is more stock-specific,��� he added.
While Citi has discontinued its coverage on Satyam, it did have a ���buy��� recommendation before the scam broke out. ���It was a ���buy��� in terms of valuations,��� he added. Interestingly, more than 50% of Citi���s India equity recommendations are ���sell���.
Mr Narain said: ���The India offshore story will slow down. But within that, one will see a shift to quality. Our call is that India will see more business coming out of this. However, we need to see some stability for entities to take informed decisions.���
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