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'India macro story good, but not great'
July 11, 2006
James Breiding of Naissance Capital says that they are watching out for the earnings season in India and they have not seen many redemptions.
He further says that investors have become discerning and the India macro story is good, but not great.
He adds that lack of government reforms is also a key factor in India.
Excerpts from CNBC-TV18's exclusive interview with James Breiding:
What have you been seeing over the last couple of months with your funds? Are there fresh inflows coming or is the money getting withdrawn?
We haven't seen too many redemptions. The correction probably was too abrupt and too large. That was probably one of the positive aspects about it that caught people a bit off-guard. Most of our investors are taking the view that it is probably better to stay put and it is probably too late to sell.
The correction really had nothing to do with India, it had more to do with the uncertainty concerning the US Fed policy. Investors are becoming a bit more discriminate, discerning now, they are looking eagerly for facts that support their decision.
So we are seeing some separation of the weak from the better ones among emerging markets and now it remains to be seen how India would fair in that context.
The macro story is okay but not great. We have seen the disappointment with regard to government reforms last week. The monsoon has improved but it's still below average as compared to last year. Interest rates like everywhere else has been trending up.
The key variable right now is how the earning season fares and whether or not the remarkable growth story in India continues to hold its course. We have seen 20 quarters of growth, in excess of 20 per cent and the market is waiting to see whether it deserves to be re-rated.
Are you saying you expect to see a fresh wave of redemption when the markets do pullback, emerging markets like ours to pullback?
Investors have given us a little bit of benefit of doubt. We have heard clients say that if losses continue, they all will be reviewing their commitment to India. It is quite an important period.
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