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Indian markets are likely to remain bullish over the next three years, believes Birla Sun Life AMC CEO A Balasubramanian. In an interview with Jash Kriplani, Balasubramanian says drop in inflation would eventually bring down interest rates. Exceprts:
Where do you see the markets heading till election results are declared on May 16? At what levels you see the Sensex trading on the eve of results?
Though it is difficult to put any level for the index, overall we are confident that we are getting into the long-awaited bullish outlook. This will get further reaffirmed after the outcome of the election. We are at an inflection point from the global economic recovery point of view. All things put together, we may see a good bullish market over next three years.
When can we expect domestic investors’ interest reviving?
It is sad that domestic investors have not participated in the recent rally. FIIs find India better-placed among their global choices, including emerging markets. We are told India will get more inflows as we move forward if a stable government is elected. Indian investors can’t ignore our markets for too long. They have to increase the allocation to equity given the fact that drop in inflation will eventually bring down the interest rate.
What were your expectations from the monetary policy?
Broadly, the monetary policy outcome was in line with the market expectation. We don’t expect this to have any impact on rates. So, there will be no impact on mutual fund fixed income schemes.
With the wholesale price index at a nine-month low and CPI inflation at a 24-month low, do you think inflationary pressures are behind us?
There is a high probability of CPI inflation coming down given the fact there is a fall in food and vegetable prices. Recent drop in rupee-dollar movement could also have some impact on fuel prices in the economy. Overall, the outlook on inflation trend does not look scary.
Is there a renewed interest by the retail investors?
Not much, however, we are seeing the flows beginning to happen. In last two months, there has been a decent flow into equity schemes, though they are not big enough to talk about.
Diversified mid-caps have started outperforming large cap peers. Do you expect mid-caps to continue to outperform?
In the recent past, mid-cap funds have delivered better returns than large caps. In any market, after any big move in large-caps, interest does get generated