Adrian Mowat, MD AND Chief Asian and Emerging Markets Equity Strategist, J.P. Morgan (Asia Pacific), paid a quick visit to Mumbai last week. BT’s Clifford Alvares spoke to him on the stock markets and how the US subprime crisis affects India. Excerpts:
What is your view on the Indian markets?
We are underweight on India within emerging markets. The WPI has come down, but there’s still inflationary pressure. It’s also difficult to see the government increasing its infrastructure spending because of the political paralysis. India will perform, but there are a lot of opportunities elsewhere.
Will the US sub-prime crisis affect India?
US companies may delay their IT projects by a few months. Elsewhere, refinancing will cost more for Indian companies that have acquired companies abroad. As external commercial borrowing matures, it will get expensive. India runs current account deficits and needs to constantly attract capital; and people’s risk appetite is low at the moment.
Which sectors do you like?
I like steel a lot, because of infrastructure spending in emerging markets. The ongoing infrastructure story is very robust. Indian companies are very well placed to take advantage of this. We see the market underperforming a bit but the structural story in India remains very strong.