"Markets likely to see profit booking before budget: Rahul Chadha, Mirae Asset"

India's GDP growth is slowing down: Mirae Asset inv

What to your mind is a bigger event risk for investors for the next three to six months? Would it be anymore European problems that could come out or crude which could be a big problem for the equity market? 

Over the next three months, it is more a concern on the rising oil. Greece, for the time being, looks like has been settled, though you keep hearing all these voices where a section in Europe believes that the damage would be far less if Greece is made to leave Euro at this point of time.

But that is a remote possibility. At this point of time, particularly for emerging markets like India, rising oil remains a big vulnerability and we have seen that in the past. It was the case in 2008 and 2011 where oil impacted consumer demand and derailed the recovery.

India is to come out with its Q3 GDP figures. The expectation is around 6.3 to 6.5. Do you think it is reasonable? 

That is a fair number. We will clearly see slowdown happening in India and this is a culmination of what has happened all these 12 months where approvals were hard to come through. So, clearly going forward the key thing for India is inflation.

What are your expectations for the upcoming budget in India? 

We will clearly see some profit booking ahead of Union Budget because we have seen a sharp rally in the month of January which has been completely unprecedented. We have got key events like Uttar Pradesh election results and the market is anticipating a favourable verdict for the ruling party increasing their vote share. It is highly likely that we see some bit of a rise in taxes in the budget.

This rally has pretty much stretched itself. Do you take a stronger stance on India post the reforms? 

It was more of an anticipation as last year the Indian markets were one of the worst performing markets in the region and that was largely on back of the fact that inflation was fairly entrenched in the system and policy making was fairly stagnant. We have seen reversal of both of them in which inflation has peaked and for the first time in two years we saw inflation below 7% last month.

Government has also taken steps particularly from PMO to resolve all the fuel supply issues for large power projects. So things are moving, though one would love to see things moving a bit more faster.

What sectors in Asia and in particular India, you are looking at right now? 

We continue to like consumer goods and strong franchises which have though not participated in the rally but still look attractive from a two-year perspective over the region. We continue to be positive on the energy space, but that is more from the region rather than India because India options remain limited. Again we like the tech space quite a bit as well.

EU leaders are worried about how a possible full blown bailout could lead to a systemic failure. Would you agree with this analysis? 

There is a section in that camp which believes that they can live without Greece. The systems are robust enough and over last six-seven months they have become confident, but also there is a majority of the camp which believes that it is probably not.