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We expect FII inflows to continue in 2014, says Sam Mahtani

We expect FII inflows to continue in 2014, says Sam Mahtani

Sam Mahtani, Director, Emerging Market Equities, F&C Asset Management, says the country's economic growth, the outlook for domestic interest rates and results of the coming general elections are going to be the key drivers of Indian equity markets next year.

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Sam Mahtani, Director, Emerging Market Equities, F and C Asset Management
Sam Mahtani, Director, Emerging Market Equities, F&C Asset Management, speaks to Money Today about Indian markets and his favourite stocks.Q. Where do you see India's stock market around this time next year? Where does India figure among emerging markets for foreign institutional investors (FIIs) like you?A. We expect the Indian stock market to deliver 14-15% returns over the next 12 months.Q. What are the factors that are likely to impact stocks in 2014?A. The country's economic growth, the outlook for domestic interest rates and results of the coming general elections are going to be the key drivers of Indian equity markets next year. Plus, there is the US Federal Reserve's plan to taper its quantitative easing, or QE, programme.Q. The Indian market is FII-driven. Do you think there is a need to change this by ensuring more participation by domestic institutions and retail investors? If yes, how can it be done?A. Yes, ultimately, the Indian market needs more domestic participation. There is a need for a policy framework to encourage more domestic investment in equities.Q. What are your views on QE tapering? How will it impact FII investments in India?A. We think that the tapering of the quantitave easing programme has been largely discounted by most market investors. So, we don't expect any significant market correction because of that.Q. Will the coming general elections have an impact on FII behaviour in India?A. We think there may be some impact. It really depends upon the outcome of the general elections next year and whether the new government is willing to implement economic reforms. If the Bharatiya Janata Party is able to form the new government at the Centre, there will be an initial boost to the equity market. However, we will have to see if they can actually carry out the muchneeded reforms.Q. FIIs invested Rs 97,000 crore in equity markets this year till November 26. How do you see FII flows in 2014?A. We don't have a forecast for this. Generally we expect FII inflows to continue over the next few years.Q. Which companies are you positive on and which are the ones on which you are likely to stay positive in 2014 as well?A. We like ITC in the consumer sector, HDFC Bank and ICICI Bank in the financial sector, TCS in technology and L&T in the infrastructure space. We focus on high-quality companies in India with strong management teams.

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Sam Mahtani, Director, Emerging Market Equities, F and C Asset Management
Sam Mahtani, Director, Emerging Market Equities, F&C Asset Management, speaks to Money Today about Indian markets and his favourite stocks.Q. Where do you see India's stock market around this time next year? Where does India figure among emerging markets for foreign institutional investors (FIIs) like you?A. We expect the Indian stock market to deliver 14-15% returns over the next 12 months.Q. What are the factors that are likely to impact stocks in 2014?A. The country's economic growth, the outlook for domestic interest rates and results of the coming general elections are going to be the key drivers of Indian equity markets next year. Plus, there is the US Federal Reserve's plan to taper its quantitative easing, or QE, programme.Q. The Indian market is FII-driven. Do you think there is a need to change this by ensuring more participation by domestic institutions and retail investors? If yes, how can it be done?A. Yes, ultimately, the Indian market needs more domestic participation. There is a need for a policy framework to encourage more domestic investment in equities.Q. What are your views on QE tapering? How will it impact FII investments in India?A. We think that the tapering of the quantitave easing programme has been largely discounted by most market investors. So, we don't expect any significant market correction because of that.Q. Will the coming general elections have an impact on FII behaviour in India?A. We think there may be some impact. It really depends upon the outcome of the general elections next year and whether the new government is willing to implement economic reforms. If the Bharatiya Janata Party is able to form the new government at the Centre, there will be an initial boost to the equity market. However, we will have to see if they can actually carry out the muchneeded reforms.Q. FIIs invested Rs 97,000 crore in equity markets this year till November 26. How do you see FII flows in 2014?A. We don't have a forecast for this. Generally we expect FII inflows to continue over the next few years.Q. Which companies are you positive on and which are the ones on which you are likely to stay positive in 2014 as well?A. We like ITC in the consumer sector, HDFC Bank and ICICI Bank in the financial sector, TCS in technology and L&T in the infrastructure space. We focus on high-quality companies in India with strong management teams.

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