What do you make of the current market setup? Nobody was expecting this kind of comeback in the market, this kind of turn in global liquidity, but everything is happening for good for India. Is this a permanent change or do you think this is a very subtle change, we should not get excited about?
Saion Mukherjee: From the Liberation Day on 2nd of April who would have thought, the markets are up since that day and not only India even if you look at some of the economies and markets which are probably most impacted because of this trade war, they have also behaved pretty okay. They are down mid-single digit in terms of US dollar. So, to that extent globally there has been an element of calm here and of course, the India story and India not being impacted much because of the trade war also benefited. And the fall in US dollar which led to capital flowing out of the US and finding its way into other international market and India obviously is a beneficiary of that. So, as of now things look quite okay.
The market construct looks quite positive. But I do not think we are out of the woods yet. My concern would be how the economy shapes up globally and for India over the next 12 months we still think there are headwinds to corporate earnings and the risk premium which actually has not really flared up, we have to keep watching that. So, yes, it is good so far, but I mean India can definitely outperform other markets, but I think we still need to be cautious and selective at this point.Any specific reason why FIIs are back, not that I am complaining, not that you are complaining, not that anybody is complaining but we are simply curious to say that is there a reason why FIIs are coming back?
Saion Mukherjee: If you look at last six months, I mean for the entire fiscal 25 FIIs have been big seller in Indian equities, that was a big negative year for them, and FII participation has not been that great. There was always complaint about valuations and since the correction that we have seen since September has made valuations in various pockets more palatable. And in the overall global construct, when they are looking at allocating capital, India’s long-term story looks much better and less concerning than many of the other economies and that is the reason you see FIIs coming back. And if you had noted, towards the end of March we were seeing big inflows till 2nd of April when we started seeing some selloff, and that is now continuing because the worst of tariff news seems to be behind us at the moment.
Do you now think that this FII money could be more tactical in nature purely because of the heightened uncertainties around China?
Saion Mukherjee: Yes, absolutely, I do feel that way that it is more tactical than structural. I mean, in our conversations with FIIs, they are still struggling with valuations for India and to that extent how much higher valuation they would be comfortable is something to watch out for. The fact remains that earnings are still getting revised lower.It is not a major cut, but nonetheless it is getting revised lower and our economics team is forecasting a slower growth which is sub-6%. So, though we are better off than others, but there are challenges in terms of economic growth and earnings. So, to that extent I see this inflow more tactical.