8 Questions With : Maneesh Dangi, Co-Chief Investment Officer of Birla Sun Life Asset Management Co. Ltd
Updated on: 19 Jun 2016
The co-chief investment officer at Birla Sun Life says govt has done a good deal by plucking some low-hanging fruits and taking some hard steps to clear the slate before writing a new story
Corporate earnings in India have been reset in line with the nominal growth rate and while the bank bad loan clean-up and commodity stabilization will help things improve from here on, the 15-17% growth in earnings that used to be the norm is history and investors should prepare for around 11-12% growth in the medium term, Maneesh Dangi, co-chief investment officer, Birla Sun Life Asset Management Co. Ltd, said in an interview.
In its first two years, Prime Minister Narendra Modi's government has done a good deal by plucking some low-hanging fruits and taking some hard steps to clear the slate before writing a new story, Dangi said.
In Singapore, what are investors' concerns on India? In your interactions here, how do investors see the India story? Are they bullish on India by default as there are not many other options?
Right now, the entire emerging market pack is being looked at with caution. Concerns surrounding India particularly have declined substantially, but if any global event triggers a risk-off, India, too, could face capital outflows.
For now, the key concern that I have heard the most is about the limited absorption capacity of Indian markets and the lack of depth with respect to attracting and retaining large active flows. This is typical of any developing, growing economy (that) offers lucrative returns in a world chasing yield. That said, on a standalone basis, India's macro situation has improved significantly, the twin deficit problem is well under control. Re-adherence to fiscal discipline has ensured a fiscal deficit of 3.9% of GDP (gross domestic product) in FY16, current account deficit as a percentage of GDP has come down from 4.7% in FY13 to 1.1% in FY16; inflation is better behaved at around 5% from 10% levels during FY08-14.
A fruitful by-product of this is a much neater deprecation of INR versus the episodic move in the middle of 2013. All these measures have helped India find its way out from the Fragile Five (Turkey, Brazil, India, South Africa, Indonesia) in 2013. On a relative basis, of course, India is better placed than its peers who are either struggling with plummeting commodity prices and/or political tension.