Cautious on Indian market as some rotation of investments back to China likely: Standard Chartered Bank

Abhilash Narayan, senior investment strategist-group wealth management at Standard Chartered Bank, Singapore, on Wednesday, said that there could be some rotation of investments back to China from India.

In an interview to CNBC-TV18, he said, “We are neutral on emerging market equities and within that, we do have a slight preference for India.”

“However, we are slightly cautious on the Indian market for a couple of reasons. First, the Fed taper announcement is coming up, potentially later this month. Second, some of the inflows seen in the past month were due to investors rotating out of China, given the regulatory scrutiny and concerns over there, some of that money flowed into India. But as regulatory concerns ease there, markets become more accustomed to it, we could see a bit of rotation back from India to China,” Narayan said.

On ECB meet, he said, “The upcoming European Central Bank (ECB) meeting is something that has flown under the radar of most investors. We think that there is a good chance that the ECB announces a steep reduction in the monthly purchases, but it's important to distinguish it from the tapering, right, because in tapering, the Fed will announce a reduction in bond purchases every month. And the aim is to get down to zero, whereas for ECB, we expect it to bring it down from USD 80 billion to USD 60 or 65 billion, and then continue purchasing at that pace.”

For the entire interview, watch the video