Dalal Street Business - The Intelligent Indian Investor

India's Biggest Ever Bull is Cashing Out

Friday, December 07, 2007

Indian speculators god, Rakesh Jhunjunwala is just a pawn when compared to the biggest ever Bull Dalal Street had in its history. Presenting, Sanjiv Duggal, Sr. Fund Manager, CIO and Director of HSBC Holdings Plc overlooking US $ 11 Billion of investments, the World's largest holding of Indian equities.

Here is what Sanjiv Duggal has to say about the future course of investing in Indian markets,

Investors aren't factoring in earnings and news flows, but valuing people's dreams. The market is pricing in a lot of growth for the next two to three years.

You can interpret this kind of reference for stocks like Reliance Power /Energy which doesn't even have the land, capital nor resources.

Cashing Out:
Power equipment manufacturers, for example, are seeing revenue growth of 25 percent to 30 percent a year and their stock prices assume the rate will continue, he said.
...is considering inviting investors to take some of their money out of the fund and seek better-valued equities elsewhere. He is cutting back on L&T and BHEL. He expects Indian stocks to decline over the next 18 months to 24 months.

Selling Banks
Overall earnings growth will slow to between 10 percent and 15 percent for the next three years to March 31, 2010, Duggal estimates, from about 30 percent in the previous period. Duggal said,

The fund has reduced holdings in banks to less than the benchmark, the S&P/IFC Emerging Markets Investable India Index. High interest rates will dent demand for loans and the central bank will lift reserve requirements. I have a cautious view on India as it's become increasingly difficult to find value. Markets will struggle to perform over the next year

Via [Bloomberg]