A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, expressed optimism about India's economic performance, emphasising the solid foundation built for the future.
He anticipates a favourable momentum for India as global interest rates decrease, leading to increased flows into emerging markets, with India poised to be the primary beneficiary.
“India so far has not only been one of the best-performing economies in the world, but the way we have built the base for the future, we will continue to see the momentum more in favour of India. As interest rates start coming down globally, the emerging market flows will go up and therefore India will become the largest recipient of those flows,” Balasubramanian said in an interview with CNBC-TV18.
Foreign investment in Indian government bonds experienced a notable surge in the final quarter of 2023, reaching a six-year high, driven in part by JPMorgan's decision to include the debt in its indexes.
During October–December, overseas investors purchased government bonds totalling ₹350 billion ($4.2 billion), contributing to the highest annual total since 2017, as indicated by clearing house data.
Balasubramanian also shared insights on the interest rate scenarios, predicting a potential reduction in rates by the United States in the latter half of the current calendar year. He believes the US will experience a slowdown in job rates and inflation, leading to the initiation of a rate-cut cycle in the same period. For India, he anticipates flat interest rates in the current year, with any rate cuts likely to occur in 2025.
The Reserve Bank of India at its December 8, 2023, policy meeting, left the lending rate unchanged at 6.5%. The Monetary Policy Committee aimed to focus on the "withdrawal of accommodation," and the RBI expected inflation to persist above its comfort level through the financial year ending March 2024.
Balasubramanian also highlighted the growing prominence of the mutual funds industry among investors. He emphasised the increasing popularity of systematic investment plans (SIPs) as the preferred method for saving money in mutual funds. Predicting a continued rise in SIP numbers, he expected incremental considerations to be directed towards SIPs.
In December 2023, equity mutual funds witnessed their 34th consecutive month of inflows, reaching ₹16,997 crore, reflecting sustained investor interest in equities despite market fluctuations, according to data from the Association of Mutual Funds in India (AMFI).
(Edited by : Ajay Vaishnav)
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