印度股市外资回流信号：估值修复与Q1财报强劲

WE HAVE BEEN TALKING ABOUT THE AUCTION SYSTEM. ANY THOUGHTS ON THAT? LAKSHMI: HI, GOOD MORNING. SAVIO HAS COVERED PRETTY MUCH IN DETAIL. IT IS VERY EARLY DAYS. ANY SYSTEM THAT IS INTRODUCED FOR THE FIRST TIME TYPICALLY TENDS TO HAVE TROUBLE, AND IT'S NOT THAT INDIA IS THE ONLY ISOLATED CASE THERE. WE HAVE SEEN THAT WHEN SYSTEMS LIKE THESE ARE SUBMITTED ACROSS THE WORLD, OBVIOUSLY INITIALLY THERE WERE THESE KINDS OF ISSUES, SO I THINK IT'S A MATTER OF TIME WE SEE THESE GETTING RESOLVED.

HASLINDA: DO YOU THINK INDIA IS GETTING INTO AN ERA OF HIGHER REGULATION? LAKSHMI: NOT REALLY. IF YOU ARE REFERRING TO THIS PARTICULAR CLOSING AUCTION SYSTEM, I THINK EACH OF THESE HAVE THE MODUS OPERANDI VERY DIFFERENT. IT IS A MATTER OF TIME, AS WE ARE EXPANDING, THE BASE MARKET CAP IS ON THE RISE, IT IS A MATTER OF TIME THAT THESE BEST PRACTICES, WHICH THE GLOBE IS DOING, STEP INTO INDIA AS WELL. I DON'T SEE THAT AS EXCESSIVE REGULATION.

HASLINDA: I WANT TO TAKE YOU TO THE INDIAN EQUITY MARKETS. IT REMAINS TO BE LACKLUSTER. FOREIGN INVESTORS HAVE BEEN PULLING MONEY OUT. THE AMOUNT THIS YEAR SO FAR EXCEEDS ALL OF LAST YEAR ALREADY. WHAT IS THE CATALYST THAT IS GOING TO CHANGE THIS? LAKSHMI: A COUPLE THINGS. IF YOU SEE THERE OBVIOUSLY HAS BEEN A LOT OF VALUATION RELATED CONCERNS COMPARED TO THE EMERGING MARKETS OR THE REST OF THE GLOBE. THE GOOD PART IS QUITE A BIT OF THAT IS STARTING TO ABATE.

THE FOREIGN INVESTOR MOVEMENT THAT WAS NEGATIVE WILL HUGELY TURN POSITIVE. BUT IF YOU SEE THE LAST TWO MONTHS, SPECIFICALLY JULY IN THE MONTH WE ARE IN, THE TREND IS GIVING YOU A POSITIVE SIGNAL. THIS MONTH ALONE WE ARE TOUCHING CLOSE TO $2 BILLION OF CAP FLOWS. LAST MONTH WAS CLOSE TO $3 BILLION. ALSO IF YOU SEE THE VALUATION GAP BECAUSE OF THIS UNDERPERFORMANCE OF INDIA, THE VALUATION GAP IS CLEARLY CRUNCHING. IT'S NOW CLOSER TO THE LONG-TERM 10 YEAR AVERAGES.

THE Q1 EARNINGS HAVE BEEN ABSOLUTELY FANTASTIC. IT IS NOT JUST CYCLICALS THAT HAVE DONE WELL, IT IS ACROSS SECTORS THAT WE HAVE SEEN VERY POSITIVE. AND IN FACT IF YOU SEE A YEAR ON YEAR BASIS THIS IS THE BEST QUARTER WE HAVE SEEN IN THE LAST NINE TO 10 QUARTERS. I WOULD SAY THINGS ARE EVOLVING AND GETTING BETTER. WE DON'T YET THERE, BUT A 17 YEAR LOW OF PARTICIPATION ALSO GIVES A MASSIVE OWNERSHIP FOR THE FOREIGN INVESTORS -- OWNERSHIP OPPORTUNITY FOR THE FOREIGN INVESTORS.

HASLINDA: INDIA REMAINS THE MOST EXPENSIVE AMONG MAJOR ECONOMIES. YOU ALSO TALK ABOUT EARNINGS PROVIDING THE SUPPORT. DO YOU SEE EARNINGS HELPING TO REVERSE COURSE FOR THE INDIAN EQUITY MARKET? LAKSHMI: IT DEFINITELY LOOKS LIKE THAT. IF YOU LOOK AT THE UPGRADES VERSUS DOWNGRADES, 15 UPGRADES, ABOUT 10 DOWNGRADES. IT IS TILTING IN FAVOR OF INCREMENTAL EARNINGS UPGRADES. POINT TWO IS LOOK AT OIL MARKET COMPANIES. CRUDE CONTINUES TO BE A BIG JOK ER IN THE PACK.

IT'S NOT JUST METALS, WHICH IS MORE CYCLICAL. IF YOU LOOK AT THE AUTO SECTOR, THE COMMERCIAL WEAKER DEMAND, LOOK AT THE FINANCIAL SERVICES WHERE THERE HAS BEEN ASSET QUALITY WHICH HAS BEEN IMPACT. THERE HAS BEEN CREDIT GROWTH THAT HAS BEEN TOPLINE GROWTH. IT IS CLEARLY VISIBLE THAT THERE IS A GENERAL UPTICK IN THE EARNINGS MOMENTUM. THAT COULD LIKELY FLOW IN THROUGH PROBABLY THE NEXT YEAR. I THINK THE KEY FOR INVESTORS, ESPECIALLY THE FOREIGN INVESTORS, ARE THEY GOING TO BE SUSTAINED UPGRADES?

I THINK SOME BIT OF THIS IS GOING TO BE MORE SENTIMENTAL, AND I MUST ALSO BRING IN THE ACTIVITY IN THE PRIMARY MARKET. I THINK THAT ALSO HAS STARTED SEEING SOME RENEWED MOMENTUM. THINK ALL THAT AXIS IS A STRONG CATALYST FOR FOREIGNERS TO TAKE NOTE OF INDIA. HASLINDA: I WANT TO LOOK AT THE RBI, THE LATEST MINUTES HAVE BEEN PRETTY HAWKISH. WHEN YOU LOOK AT THE MARKETS IT HAS BEEN PRETTY SPLIT ON WHEN THE RBI MIGHT HIKE.

SOME SAY AT THE END OF 2026, OTHERS SAY EARLIER. WHAT IS YOUR TAKE ON WHEN THE RBI MIGHT MAKE ITS MOVE? LAKSHMI: I DID WHAT WAS STATUS QUO. WHAT THE RBI SUGGESTED IN THE MINUTES, THERE IS CONCERN AROUND INFLATION AND THAT INFLATION IS EMANATING LARGELY FROM COMMODITY PRICES. IT WILL BE A DEFINITELY TRICKY SITUATION. OUR BASE CASE ASSUMPTION IS WE DON'T SEE ANY RATE ACTION, AT LEAST THIS CALENDAR YEAR, BUT LOOK AT CRUDE OIL PRICES.

AS WE SPEAK CRUDE IS ALREADY ON THE RISE. I THINK THERE ARE ALREADY MOVING PARTS AND WE NEED TO TAKE CUES FROM WHAT THE U.S. WILL DO. BASE CASE, NO RATE ACTION, BUT IT IS STILL EVOLVING. THE MARKETS ARE PRICING IN A RATE HIKE AT THE END OF THIS FINANCIAL YEAR, BY MARCH 2027. AND OBVIOUSLY THE BOND MARKETS ARE TAKING CUES FROM THAT. BUT FOR NOW MARKETS ARE NOT OUTWARDLY DISTURBED BY RATE ACTION FOR SURE. HASLINDA: I'M WONDERING HOW YOU ARE ASSESSING THE SURGING YIELDS IN THE U.S.

YOU SEE THE PLAY THROUGH IN THE ASIAN MARKETS, HOW THE YIELDS IN ASIA HAVE BEEN MOVING IN TANDEM WITH THE U.S.. HOW MIGHT THIS IMPACT INDIA'S OWN MARKET? LAKSHMI: IN INDIA, IF YOU SEE THERE IS REASONABLY STRONG APPETITE FOR GOVERNMENT BONDS, LARGELY FROM INDIAN BANKS AND GOVERNMENT BENEFIT FUNDS, IT IS NOT REALLY HINGING ON FOREIGN PARTICIPATION, WHICH IS WHAT THE CASE HAS BEEN FOR A VERY LONG TIME. I THINK THAT DEFINITELY WILL CONTINUE FOR THE FORESEEABLE FUTURE, IS WHAT OUR VIEW IS, UNLESS WE SEE A FISCAL SLIPPAGE, WHICH IS NOT OUR BEST CASE ASSUMPTION -- BASE CASE ASSUMPTION.

I THINK WE ARE LIKELY TO SEE A TIGHT RANGE OF BOND YIELDS. MAYBE WE COULD EDGED TOWARD THE 7% MARK IF U.S. YIELDS WERE TO CONTINUE AN UPWARD MARCH. I THINK WE ARE LOOKING AT THE LOWER END OF 6.8 TO THE UPPER END OF 7%, BUT IT WILL BE A TIGHT GROOVE, BECAUSE WE HAVE LEVERS IN THE DOMESTIC MARKET WHICH IS SUPPORTING THE MOMENTUM. HASLINDA: BEFORE WE LET YOU GO, A QUESTION ON THE RUPEE. WHAT COULD BE THE NEXT PRESSURE POINT FOR THE INDIAN RUPEE?

LAKSHMI: SO FAR I THINK WE HAVE SHOWED UP FOREIGN-EXCHANGE RESULTS BY CLOSE TO $45 BILLION. THAT HAS GIVEN A REASONABLE STABLE BIAS TO THE RUPEE. I BRING IN CRUDE OIL. WE ARE EDGING UPWARDS. FORTUNATELY WE CANNOT DO ANYTHING ABOUT IT AS A NATION. THINK THAT CLEARLY MEANS THE DOLLAR RUPEE AT THIS POINT IN TIME CAN BE ON A SLIGHTLY STICKY WICKET. THE DOLLAR IS WEAKENING. GIVEN THAT WE HAVE SEEN THE DEBT, GIVEN THAT SCENARIO I WOULD SAY WE ARE LOOKING AT A SLIGHTLY MORE STABLE CURRENCY GIVEN THAT THE 4X IS MORE COMFORTABLE, BUT WE CANNOT BE COMPLACENT.