Herald Van Der Linde, head-Asia equity strategy at HSBC believes that the valuations in the Indian market are high. However, according to him, IT companies in India are one of the most profitable sectors globally.
Speaking in an interview with CNBC-TV18, Van Der Linde said, “Valuations are high and markets are priced for blue-sky and it is very easy for clouds to appear, so the story starts to falter a bit and that’s what the concern with India as well.”
“India started the year very good, it outperformed but over the 2 weeks it started to underperform and that’s a reflection of multiple things but valuations is one (reason) and of course corona cases is not helping India either,” he said.
Talking about sectors, he said, “India has got some of the profitable companies in emerging markets. So there has always been stronger traction to buy some of those companies when the markets are down. So, when your macro factors do not look good but your companies continue to be very strong and you have phenomenal brands that operate in India and that’s when people start to come back in.”
On emerging markets, Van Der Linde said, “EM has not performed very well and we have seen some of the large markets, for example, China has not performed so well, Korea peaked out in January and the story here is that inflation and bond yields have been the reason of emerging market underperformance.”
For entire interview, watch the video