After Deepak Parekh’s return from Singapore, many Indian brokerage houses sent their Equity Chiefs to Global Financial Centers – London, New York, etc to engage their Foreign Clients. Here is the outcome of the meeting of Equity Strategists on Indian Markets.
FIIs are still very interested in the India Growth Story, but are fed with the Policy Paralysis. Moreover, they can’t understand how the Indian petty political system can deliver results given the emasculation of the two national parties. Regardless of how GAAR pans out, FIIs attention is drifting to other Asian markets like Thailand and Indonesia. Let us see what Pranab Ji will do in the Parliament in the next few days.
Hedge Funds Flee India – The Finance Minister Mr. Pranab Mukherjee’s retrospective taxing on Vodafone and GAAR have put hedge funds off from investing in India. Not a single hedge fund wants to invest in India until the FM clarifies GAAR (and why should they given that short term CGT on F&O profits is 30%)
FII interest in Indian Power, Infrastructure, Construction and Real Estate sector is at an all time low because of the Government’s impotence to handle Inflation and refraining itself from spending on Core infrastructure and pushing useless socially populist schemes.
It was a big surprise that Institutional Investors interest in forensic accounting and the use of clever structures by promoters is getting very HIGH ATTENTION. FIIs have now recognized that the “India story” now stands as much for fairy tale accounting by leveraged promoters.
Institutional Investors are of the view that American economy is clearly, albeit slowly, recovering but the European situation is terrifying as they await the next bout of ECB LTRO or should they start planning for the Euro’s seemingly inevitable collapse.
The worrying trends in India’s BoP will cause INR to weaken further. French Institutional Investor maintained target of INR55/USD by year end. This continues to be a non-consensus call; expect more currency “strategists” to get on the bus. Stay tuned!