Q. India’s markets have witnessed a sharp uptick in trends after the new government came to power. How realistic are stock valuations at the moment?
The Nifty index is up 24 percent year-to-date as stocks were re-rated after the new government assumed power. The market’s reform expectation is not misplaced, but the results will be slower than expected. Investors will have to work harder to search for value.
Q. What do overseas clients say about the investment climate in India? Is it starting to change?
They are optimistic about the longer term even as clients with a slightly shorter term mandate are playing for a correction.
Q. What more does the government need to do, or indicate, to boost investments?
It needs to provide a transparent set of rules to instill confidence in foreign investors. A judiciary at odds with the government [as seen in the coal scam and Vodafone tax case] is not an ideal climate to ensure that investors feel comfortable. India needs to drop its suspicion of foreign investors.
Q. Is M&A activity picking up for your bank?
We have been very active in equity markets this year. On M&A, we are working on financial services and technology sector mandates.
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(This story appears in the 17 October, 2014 issue of Forbes India. To visit our Archives, click here.)