Business | Investment
Time to move in when the market is down
Investors in India's main equity markets have faced a torrid time over the last six months. But with Indian equities down by almost 50 per cent since last year, Sanjiv Duggal, manager of the $5.8 billion HSBC GIF Indian Equity fund, argues now is the time to invest.
- By Hugo Greenhalgh, Financial Times
- Published: 00:04 August 2, 2008
Investors in India's main equity markets have faced a torrid time over the last six months. But with Indian equities down by almost 50 per cent since last year, Sanjiv Duggal, manager of the $5.8 billion HSBC GIF Indian Equity fund, argues now is the time to invest.
"The market could double over the next two to three years," he says, "and now the risk/reward ratio is very favourable. India is the place to invest over the medium term."
Duggal, who works for Halbis, one of the specialist businesses within HSBC Asset Management, recognises there could be more volatility over the short term, but he says the fund is now positioned for a pick up in growth.
"Real estate stock is off the peaks of early last year," he says, "and a lot of stocks are off 35 per cent on the back of discounting all the bad news that is out there.
"From a medium-term perspective this means it is very attractive: we can buy into the top-tier Indian real estate where liquidity is not a problem and companies are trading at a good discount to net asset value."
As a blend investor, Duggal buys both growth and value stocks for the 80-holding portfolio, subject to the business cycle. "Now we are going more into growth," he says.
Last year, it was all change. Duggal was one of the lone voices advising investors to move out of the Indian equity markets - despite the fact they were steaming ahead. His gloomy prognosis proved painfully correct.
But despite his caution, even Duggal was surprised by the depth of the stock market falls. "We didn't expect the fall to be so sharp. It has been India's biggest fall in any rolling period; this is the weakest it has ever been. The market has halved in dollar terms in six months and it has been a major correction."
Now, though, promising signs are emerging. Economic growth might have slipped to approximately 7.5 per cent - down from three years of nine per cent growth - but it still stands strong.
"In our view we are coming to the end of the monetary tightening policy in India," Duggal says. However, whichever way the market moves over the next six months, the manager's prescience has pushed the fund to the top of its peer group over one, three, five and 10 years.
According to Morningstar, it has returned 79.62 per cent over three years, compared with the 50.41 per cent increase posted by the Morningstar IM Equity India index.
Despite election concerns, Duggal remains confident for both the fund's and the country's prospects.
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