Amidst Global Uncertainty JP Morgan Positive on India

JP Morgan is positive on India despite the global environment being quite uncertain, JP Morgan Asset Management’s Investment Manager and India Country Specialist, Rukhshad Shroff, told reporters here. JP Morgan Asset Management is a leading global asset management company providing world-class investment solutions to clients. “We are positive on emerging markets. We remain very positive on India and if you take a slightly medium-term view, there are ample reasons to be cheerful and optimistic on the Indian market,” Shroff said.

India has achieved an eight per cent GDP growth despite the global economic uncertainty. The country also attracted FIIs inflow this calendar year of around $11-12-billion till date, in an extreme risk-averse global environment, he said. In the short-term, there may be volatility and hiccups but, generally speaking, “we have got all the ingredients for a reasonable market in place,” he said. Shroff pointed out that the BSE Sensex remained positive in 23 out of 31-years and gave 60 per cent returns in five-year period. It has given 30-60 per cent returns in 7- years and registered a 50 per cent decline in only one-year.

Indian corporates’ fundamentals and earnings are good, though valuations may be slightly on the higher side of long- term averages but that was the case even six-months ago and the markets held up, which means the markets digesting these valuations allowing earnings to come through, he said. Accelerating investment in infrastructure, industrial and real estate sectors are expected to drive growth in FY 10 and the EPS could double in next 3-4-years period, Shroff said.

In fact, JP Morgan expects equities to provide better returns than other asset classes over the medium-term. “We expect equities to provide better returns than other asset classes over the medium-term, but are tactically cautious near-term, waiting for a better entry point,” JP Morgan’s Vice-President, Head of Investment Services, Geoff Lewis, said. The global stock markets retreated in May and June, but bounced back strongly in July. The emerging market economies have recovered quickly from the global recession, showing a surprising degree of resilience and economic decoupling, he said.

Commenting on the outlook, Lewis said, the US growth will moderate towards sub-par but positive levels, rather than dip back into recession. Disinflation not deflation in the US economy is the most likely outcome in 2011, he said. Global equities offer sizeable risk premia over Government bonds. Investors should be overweight with a strong bias towards emerging markets, Lewis said