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Informist, Wednesday, Dec. 18, 2024

MUMBAI – Foreign investors with a longer investment horizon still believe in India's growth story and they haven't sold Indian equities in the past two months, Pramod Gubbi, co-founder of Marcellus Investment Managers, said at a press meeting in Mumbai. Several foreign investors such as global pension funds are waiting to invest in India, but are not comfortable with current valuations, he said.

Gubbi's interaction with global pension funds suggests there is high interest in India. "They clearly see India as the rare emerging market left in the world," he said. Considering valuations are the only concern, he said foreign investors might begin buying Indian equities if corrections in the market sustain. The Nifty 50 has fallen nearly 9% from its lifetime high touched in September. On Tuesday, it closed 0.6% lower at 24198.85.

Commenting on outflows by foreign investors, he said the "hot money", which has a purpose of short-term gains from arbitrage, moved to China in October amid hope of a stimulus package, while higher US bond yields pushed some investors to move to US markets in November. Despite this, long-term foreign investors remain invested in India and continue to believe in the Indian economy, he said.

For Indian markets, Gubbi sees value in sectors that have better earnings visibility, such as information technology and pharmaceuticals. He expects private banks to also do well as these stocks are still available at reasonable valuations.   

At the event, portfolio management services pointed out that there was an opportunity for Indians to invest in companies outside India as well. Policies under US president-elect Donald Trump are likely to benefit US-based industrial companies, said Arindam Mandal, head of global equities at the PMS. Gubbi added that Trump's policies such as tariffs against other countries would increase the competitiveness of US companies. 

Knowing this, the firm has given the highest weightage to the industrial sector in its Global Compounders Portfolio, which is currently invested in 29 global companies. Since the portfolio's inception two years ago, the fund has given returns of over 31%, while the S&P 500 rose 26%, according to information on the firm's website. Guppi said it would be difficult to maintain the same rate of returns as valuations have become expensive. However, the US markets' mid-cap companies provide enough opportunity to help the fund beat the index by 4-5% going forward, Gubbi said.  End

Reported by Anshul Choudhary

Edited by Avishek Dutta

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