India may be in the midst of a slowdown but the country’s long-term growth story remains intact, says Sundeep Sikka, CEO of Reliance Capital Asset Management. This is reflected in the kind of interest shown by serious investors such as pension funds, says Sikka. In an interview with Ashley Coutinho, he says investors should get their asset allocation right and not let too much panic impact decision making.
What is your outlook for Indian equities?
The equity market has been range-bound for the last 15-18 months and is down about 5.4% from the high it touched on February 21 this year. The rupee has weakened considerably in the last six months as well. FIIs are not buying at this point in time but the Indian market today is effectively 25-30% cheaper compared with what it was six months back. Somehow, there has been a lot of negativity about how things have been moving in the economy. But any country that has gone through a secular bull run is bound to go through such phases. So I don’t think there is need to get too worried.
What are the key positives for the market?
The biggest positive is that everybody is negative. As far as we are concerned this is a good time to invest as there won’t be much downside from here. There may be headwinds in the near term but our long-term story is very much intact. We need to be positive. There’s nothing wrong with growing at 6.5% or 7%. We are a victim of the high expectations that we created for ourselves. We started believing that nothing less than 9% will do. Even China’s GDP growth is slowing down. I do not belong to the camp that believes that everything is over in India.
What is the outlook on FII inflows?
In the current scenario one can’t really expect too much overseas inflows into India. Investors based in countries that are facing growth issues have not been investing in India. But investors in other parts of the globe who do not have many options are coming to India. Also, we have seen a lot of interest from serious investors such as pension funds. Our long-term growth story is intact and we will continue to attract long-term money, which is far better than getting hot money.
About 1.5 million retail folios closed in FY12. Are you concerned about these numbers?
There are two parts to the