global equity markets

Equity markets across regions have performed well. But equity valuations are also increasingly becoming higher. At a global level, the risk-taking appetite of investors is increasing.

The key concerns today are direction of the US economy and sub-prime lending. What is encouraging, though, is that US consumers are continuing to consume like before. We remain long on equities compared to fixed income. We prefer emerging markets and within the Asia Pacific region, we prefer India, Korea, China and the Philippines. While Korea looks cheap within the Asia Pacific region, Chinese H shares (those listed in Hong Kong) are also relatively undervalued.

Sub-prime lending and rising energy prices are short-term concerns for global equity markets. The other risk is imposition of global trade barriers. What are your earnings estimates for the Indian market? Which sectors are you bullish on? We estimate 16% earnings growth each in FY08 and FY09. These expected growth numbers are encouraging. In terms of sectors, domestically inclined sectors are the best bets. Such sectors and companies are reasonably resilient to performance of economies across the world.

Finance, infrastructure and telecom companies are among the best companies in the Indian market. Moreover, India has the highest growth rates in cellular subscription across the world. What is the message you have for retail investors? It is good to have a diversified portfolio. Also, it’s better to have a long-term view. Liquidity concerns can be there over the short term, while over the long term, India is likely to benefit from overseas investments.