Stock Market

See limited capital inflows into EMs, India: Gunit Chadha

The co-chief executive officer of Deutsche Bank’s Asia Pacific region is definitely impressed with Finance Minister Arun Jaitley’s pitch to global investors in Singapore in order to sell the India story.

Speaking to CNBC-TV18’s Shereen Bhan, Gunit Chadha says the FM has done a good job ‘hardselling the India story’. 

Chadha also believes that India is definitely in a sweet spot as far as emerging markets are concerned.

Meanwhile, capital inflows into emerging markets will be limited and India cannot be isolated from the broad trend, he says, while adding that US Federal Reserve might hike rates in the next few months.

Below is the transcript of Gunit Chadha’s interview with CNBC-TV18’s Shereen Bhan

Q: What are your views post this pitch by Finance Minister Arun Jaitley?

A: Actually, he has been very constructive. It is a range of topics, a range of issues. The intends and alignments which he has delivered in terms of what India will do, what this government will do is all in the right areas, all progressive and yet the markets will judge the government based on the promises which have been made but the government has travelled a long distance over the last 15 months and we remain very constructive.

Global investors remain very constructive on India. Not too many economies globally which are over USD 2 trillion and growing at over seven percent. So, I have to compliment the government.

Q: In terms of capital inflows and specifically from Foreign Institutional Investors (FII) because we have seen outflows from FIIs over the last several weeks which has lead to the market coming up very sharply. Now that the Fed event, at least for now, seems to be off the table do you believe that capital inflows ill pick up?

A: Emerging market (EM) capital inflows will be challenging and as a result would stay challenge on India as well because the Fed if not now, over the next few months you can expect that there is going to be a rate hike even though one would argue that the pace may be modest, but the tailwind is not on capital flows into EM. So, it would stay challenging for India as well.

Though I would stay that notwithstanding that India trades at a premium to all other EM. India will still be a relative outperformer but with negative flow into EM as asset class totally.