Dubai: The Indian equity market is likely to continue its ‘euphoria’, registering a growth of 15-20 per cent per annum over the next 3-5 years, a senior official at investment manager PineBridge told Gulf News.
BSE Sensex surged nearly 2 per cent on Friday to a record high for the second consecutive day after Bank of Japan’s surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows.
The 30-share BSE index rose as much as 2 per cent to an all-time high of 27,894.32, while the NSE index gained as much as 1.98 per cent to mark a record high of 8,330.70, surpassing their previous highs hit on Thursday.
“They have started this initiative of reforming the whole country and economy by working on removing hurdles to growth, by bringing in more transparency and unshackle the business environment from the plethora of rules and regulations. We also have a credible Central Banker and that’s why people are getting excited,” Siddhartha Singh, Chief Executive Officer of PineBridge Investments India, told Gulf News.
“This euphoria is a reaction to what will happen to the Indian economy tomorrow. A few things have already started happening on the ground, and we will soon see a very different market.”
The Bhartiya Janata Party-led government in India, Asia’s third biggest economy, is the first majority government after three decades of coalition governments, which industry experts feel might trigger a slew of reforms in the country from power to infrastructure. “From the 3-5 years perspective, India (equity markets) looks to deliver around 15-18 per cent CAGR.
PineBridge’s India Equity Fund, has about $460 million in its portfolio. PineBridge manages about $70.8 billion worldwide as of September 30, 2014, according to the website. The firm expanded to the Middle East in January 2013 and has its regional office in Bahrain, whose investment focus is on regional private equity and real estate.
Weathering cycles:
“Don’t look at India from a macro perspective, I always tell to look for companies which can weather the cycles,” Singh said.
PineBridge expects companies in sectors such as industrials, materials and consumer discretionary, as well as those that have an export-related focus, to benefit from reforms. A lot of foreign companies will start coming in to the market due to opening up of various sectors and Singh expects a churn of companies, with the more inefficient and those without adequate technology losing market share.
“Companies that don’t have the capability to compete in this new environment will lose market share. The message from the government is to compete in the global market and be efficient and survive. Today the focus is on the consumer, who will ultimately get the benefit. The next biggest triggers for the market will be how the government manages the capitalisation of state-run banks, and the Budget,” Singh said. The annual budget will be announced in the last week in February 2015.
