Financials, retail stocks good point to start accumulating: Graham Bibby, Richmond Asset Management

In an interview with ET Now, Graham Bibby, CEO, Richmond Asset Management, talks about the valuations in the Indian market as also the sectors and themes which look best to invest at the moment. Excerpts:

Foreign institutional investors believe that valuations in India are high and they are staying away. Would that continue for some time?

I believe the market has corrected significantly from its highs. We are down towards support levels. On a technical basis, the downside is fairly limited from here. Now, the question is when does that trend reverse to the upside. In relation to that, we looked at 46 world markets, and tried to find out where is the momentum in other markets. For anyone willing to enter the market for a longer term, now would be a good time to start accumulation. For us, it is going to be more like the second half of the year where we see that trend reverse and then momentum to increase.

With the macroeconomic concerns that are currently looming large, not just for India but for the entire emerging market lot, what sectors and themes look best to invest and avoid when it comes to India for the medium term?

Going back to the way we do our analysis, we look at 46 world markets. And, then the markets that look good, we look at sectors within the markets, and then we look at individual stocks. Five or six weeks ago, India was a sell signal for us and we were out of the market. We do not focus too much on the individual sectors. However, I would say the financials and retail stocks in India will be quite a good point to start accumulating.

Yields on the 10-year treasury in the US are seeming to indicate that the Fed is going to hike rates. What is your view?

I just cannot see it. The QE2 is going to play out. The Fed would be crazy to put up interest rates in the short term. They need to see more traction and growth. They are hoping to see job creation which has not happened yet. It will be happening because from what we see, there are more and more companies looking to start to recruit. So, I do not see any possibility of interest rate increase in the short term. If it was to happen, it will probably be in the second half of the year.