Markets will stabilize in a few weeks, pessimism about India exaggerated: Shankar Sharma

Dismissing the current negative investor sentiment, Shankar Sharma of First Global told ET Now that it is a reasonable time to 'nibble back' into the markets. He advised putting 10-15% funds in the Indian markets.

Expressing faith that stability in markets will return in a few weeks, Shankar Sharma said that despite a 'terrible' global macro environment, the silver lining was that both the oil and gold prices had fallen.

A fall in gold and silver prices will not only benefit the current account deficit, but also have an impact on the future of the rupee and subsidy burden, he said.

Global economic risks are already discounted for by the markets, Sharma added. He reiterated his positive view on the Indian markets for 2012. Sharma was of the view that Indian markets have been relatively resilient compared to both the developed and emerging markets.

Shankar Sharma feels that by the end of 2012, India will look the best market among the EM pack. Stating that the macro factors are looking much better, Sharma said: "Both the inflation outlook and the interest rates situation is much better than it was five months ago."

Sharma added that he has a negative view on commodities, particularly oil.

The problem with the Indian story currently is the uncertainty emerging out of the Vodafone tax case and GAAR provisions, Sharma opined.

Asked about the depreciation of the rupee, Sharma said that he did not see it declining beyond 54.50. On the contrary, Sharma was of the opinion that the rupee will see a sharp pull-back over the next 2-3 months.

Shankar Sharma was of the opinion that Goldman Sachs and Morgan Stanley's alarmist views on the Indian economy were uncalled for. He also ridiculed the take that Indonesia will replace India as the 'I' in BRICS. "India stands head-and-shoulders above in the BRICS pack," he said.

Asked about sector specific outlook, Sharma said that he is bullish on oil marketing companies, particularly BPCL. Lower oil prices and interest rates bodes well for the Indian auto sector, he added.

Source:-economictimes.indiatimes.com