Against a net investment of Rs 133,264 crore in 2010, foreign institutional investors (FIIs) have invested only Rs 84.6 crore in 2011 till Tuesday. Adam Matthews, MD and head, Asia CPM team, JP Morgan AMC told HT that FIIs are looking for catalysts such as inflation, infrastructure and market correction to play out in 3-4 months. Excerpts:
How do you see India in the current times?
India still figures pretty well. In the near-term, we were more neutral on India in our regional portfolio as valuations looked stretched towards the end of last year. But over the next 3-5 years, as long as India continues to execute on infrastructure and there is political will to do so, India becomes a Game-on market. The outlook will look good if markets go down a little more.
How much correction you think will make it look attractive?
If there is a 10% correction, valuation will definitely get attractive but it does not have to be that way. Even if Indian companies beat the EPS (earnings per share) estimate in the second half of next year, valuations can get attractive. I think the cost of waiting for us over the next 3-4 months is not that significant and we can hold on to our neutral position in India.
When do you see FIIs coming back to Indian equities?
I think FIIs are waiting for several catalysts - a meaningful correction, inflation pressures to come down, an improvement in the execution on infrastructure - to play out and then they will come back.
What are the biggest concerns for global markets?
The US and Europe need to take strong steps to address problems from global growth perspective such as reducing US consumer debt and deal with sovereign debt crisis.