India Investment Management’s Mugunthan Siva discusses the outlook for the Indian economy and equity markets. Having been a popular destination for foreign capital inflows in 2021, appetite has cooled substantially this year as a rampant US dollar strength and aggressive monetary policy tightening sparked renewed outflows. However, despite the challenges posed by higher energy costs, geopolitical risks and other headwinds, Mugunthan doesn’t believe sentiment will remain this weak forever. “India will become a popular bet again for foreign investors who have exited over the past 12 months on rising inflation and oil price,” he says, adding that outflows over this period now amount to over US$40 billion. He says if these trends start to reverse with the global economy avoiding the risk of a hard landing, then India is primed to deliver strong performance over the longer-term. Mugunthan says there’s also a contrarian view underpinning his thesis, nothing that emerging Market fund managers have reduced their exposure to India from overweight to underweight for the first time in over a decade.
Date: 12th July 2022 | Publication: Ausbiz
