Foreign Investors Looking At Where To Invest In India, Says Macquarie's Sandeep Bhatia
China has become less attractive for investment, while India is gaining traction with an increased weightage in the MSCI index, he says.
When deciding on investments in India, it is not about whether to invest but where to do so as Indian companies offer better quality than those in Asia, according to Sandeep Bhatia, head of equity-India at Macquarie Group.
Though the valuations might give pause, they are ultimately accepted, Bhatia told NDTV Profit.
There's an underlying assumption that the current government will secure some form of majority, according to him. Even in the worst case scenario, where the seat tally might be lower than 2019, the expectation is for a majority government. Consequently, investments are anticipated based on this assumption, he said.
China has become less attractive for investment, whereas India is gaining traction with an increased weightage in the MSCI index.
Many companies and businesses are encountering challenges in operating freely in China. Even major entities like Apple Inc. and Samsung Group are facing obstacles in the Chinese market. "I think the confidence in policy level in China is extremely weak," Bhatia said.
This difficulty has led to a perception that India is now the sole large market, where Western companies can expect to operate relatively easily, he said. In contrast to the hurdles faced in China, India appears to be a more favorable and accessible market for Western businesses, according to him.
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Pockets Of Opportunity
The prevailing consensus has been to invest in the financial sector, Bhatia said. This sector holds the top position in terms of both market capitalisation and earnings contribution.
Bhatia suggested considering "less loud" sectors in 2024. Specifically, he mentioned consumer goods and consumer staples as potential areas of interest. Despite being underperformers in the past year and even over the last couple of years, these sectors could present new opportunities in the upcoming investment landscape, according to him.
There's potential interest in exploring investments in public sector banks, he said.
Bhatia suggested the technology sector, which has faced challenges amid uncertainty in the U.S. However, concerns related to interest rates have "receded", he said.
Instead of going completely underweight on financials, investors can opt for cheaper banks like State Bank of India within the financial sector, Bhatia said.
Specific technology companies such as LTIMindtree Ltd., HCL Technologies Ltd., and Tata Consultancy Services Ltd. appear to be attractive investment options, he said.
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'Cannot Be Overweight On One Sector/Theme'
"The other thing which you have to remember is that you cannot be overweight on one sector or one kind of theme all through the cycle. The market will move without you getting any warning," Bhatia said.
Sector rotation is a theme which will play out and the best time will actually be after the elections in May-June, he said.
"Once the new government is in place in July, we expect the full budget for the year to come through around that time. The entire domestic consumption, domestic investment story can also be a good place to start," he said.
Watch the full interview here:
