Business Standard’s Puneet Wadduwa talks to Dan Veneman, co-head of APAC equity strategy at Credit Suisse about how markets are priced in the negatives, and his investment strategy
stock market | Credit Suisse | Indian stocks
Puneet Wadduwa |
Last update on March 25, 2022 08:00 IST
Q – India has recently downgraded to underweight due to higher oil prices. But don’t you think Indian stocks could be a contradictory bet from a mid-term perspective given all this pessimism?
>FIIs SOLD at India
> Contrasting strategy works best when reviews are cheap
> Indian stocks are still very expensive compared to the rest of the region
Q – What are your expectations regarding return on equity as an asset class in 2022? What about the Indian Stock Exchange?
> be careful about global stocks; Cut position from “overweight” to “standard”
> Russo-Ukrainian War, rates, wage pressures be Main interests
> 2022 will be a weak year for global stocks
> Tough year for Indian stocks
Q – Foreign investors have disposed of Indian stocks since October 2021 as if there is no tomorrow.
Is the worst selling over or does it take a breath before the sale resumes?
> FII selling will continue to be a problem for Indian stocks
> There is still a lot of foreign money in Indian stocks
> rich Fifthaluations and concern; Most expensive Indian stocks in Asia
>Indian stocks are not a long bargain at current levels
Q- What areas are considered a profitable deal now?
> Southeast Asia tops the list
> Indonesia, Singapore, Malaysia and Thailand look good
> Overweight on Chinese stocks
Q- For 2022, will net exporters of commodities be a safer place to be?
> It is good to have a position as a hedge in such markets
> Don’t overexpose in merchandise plays
Q6- The US Federal Reserve interest rate turns out to be quite a bit off event for the stock markets, including India. Are global markets too concerned about the actions of the global central bank?
> US Federal Reserve way ahead of peers
> Asian markets are closely watching the movements of the US Federal Reserve
> Bond yields likely to rise
Q- What do you think of global growth in the coming quarters? Is India at risk of rating agencies downgrade in light of possible macros deterioration as oil prices rise? Are the markets still oblivious to this?
> Global growth will remain mostly on track
> Russia – Ukraine issue hurts Europe
> The United States is relatively safe
> Rating agencies may not make any decision for India
Q- Given how the global markets are recovering, are they fully priced at worst regarding the Russian-Ukrainian geopolitical issue and its impact on commodities, especially crude oil?
> Markets have somewhat ignored the geopolitical situation
> Likely to remain choppy
Q- What is the political response that you expect from the Indian government in light of the current global developments? Do foreign investors feel the lack of it, and thus the tension?
> The government and the Reserve Bank of India are in a difficult situation
> Difficult to provide financial incentives
> Inflation, demand is moving in different directions which makes things difficult for policy makers
Q- Did you adjust India Company’s profit forecast for FY 2022-23 (FY23) in light of rising fuel prices?
> EPS forecast has remained flat since Q3 FY22
> Possibility to make upgrades from a three-year offer if we can get past the period of high oil prices
> Look at the downside in the near term; There are risks to EPS forecast
Q- Obesity and underweight sectors?
> Preferred IT Services
> We will look at the local economy facing sectors (banks, below) after the uncertain phase of oil prices
Q – To what extent will companies be able to overcome the rise in fuel prices?
> Traditionally, consumer companies have been able to pass on higher input costs
> FMCG stocks will underperform due to inflationary pressures
Q – Do you think that the sharp rise in commodity prices is a result of speculation rather than an issue of supply and supply?
>bit alike; There are also supply issues
The withdrawal of Russian supplies from the market is bound to have an effect
Q- What is your advice to investors in the current market?
> It’s time to be careful for those who don’t diversify into other markets
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First published: Friday, March 25, 2022. 08:00 IST