NRI investment advisers in the UAE are positive in their outlook for the Indian market in 2020, discounting the present uncertainty in the wake of the Middle East developments which will have only a short-term impact on the Indian economy.
Dubai-based investment advisers say in unison that the real India success story is yet to happen, though there will be glitches in the short-term, and long-term investors stand to gain in 2020 and beyond as the Indian equity market creates more wealth for sustained investors.
Krishnan Ramachandran, chief executive officer, Barjeel Geojit Financial Services, Dubai said: “Financial advisers have a key role to play in guiding the investment and asset allocations for NRIs. In these times of uncertainly it is important to preserve capital and wait for the right investment opportunities that arise from time to time.
“An optimum asset allocation model based on individual risk appetite with a three to five-year horizon will be the key to wealth creation.”
He added: “NRIs can hopefully look forward to a more balanced year in 2020 compared to 2019 which saw a lopsided market growth, predominantly led by large cap stocks in the Indian equity markets.
“The positive expectations on the forthcoming budget particularly with respect to personal taxation, infrastructure spends and disinvestments are likely to improve the investment sentiments and perceptions of the NRIs.”
Bumpy ride
Binoo Nayyar, chief financial officer, TrendRiser Securities, Dubai, said: “The Indian market had a bumpy ride in 2019 when the benchmark BSE Sensitive Index scaled record highs, above the 40,000-point-mark, and the market delivered the second-best growth rate in returns after the US.”
Nayyar agrees with other analysts who predict double-digit growth in Sensex to cross at least 46,000 points in 2020 in line with the recovery in economic growth. Retail investors, who enter small- and mid-cap stocks, will be rewarded handsomely as the relative valuations for them are attractive currently.
For NRI investors, Nayyar recommends mutual funds through the SIP route. “Investors who remained with their SIPs in the past five years are set to see a fortune if continued at least for another two years. It’s going to be unimaginable gains. So, I would advise SIP investors to continue without breaking.”
However, Ramachandran recommends a more balanced mix of assets: “A judicious mix of global equity, emerging markets equity/ debt and defensive allocation to precious metals (gold/silver) could be an ideal portfolio for NRIs, apart from their allocations to the Indian markets.
“The Eurozone is at a discount to US Markets and with increasing government spends, Brexit and low interest rates, we can expect some positive demand trends to appear later in 2020 and it will be advisable to allocate some portion to these markets with a three to five-year perspective. Emerging markets especially Mexico, Brazil and Indonesia are expected to fare well in 2020,” he said.
Nayyar reiterated his earlier advice: “I would like investors to build a portfolio consisting of mid-cap and small-cap companies, select blue chips, and debt instruments such as government securities. NRIs can invest in government bonds, and long-term securities issued by the government of India. The bonds can be directly purchased from the proceeds available in the NRE/NRO or FCNR accounts.”
Reallocation strategy
Similarly, Jojo James, chief executive officer, Fosbury Wealth Managers, and Partner of Tamim Chartered Accountants, Dubai, holds on to his earlier view that NRI investors should adopt a reallocation strategy by shifting funds to safer avenues.
They should shift their investments to different portfolios such as migrating to debt funds or switch to US-focused INR funds as they performed well in the past two years.
Though the Indian economy is going through a rough patch, even worse with the present oil price volatility and mounting import bill, the outlook is rosy in the longer term.
As most analysts predict, Indian growth will rebound and the economy is poised to grow at least 7%, surpassing that of China. For the longer term, India-focused instruments are the best bet in view of this outlook.
“For the corporates, earnings will go up, coupled with tax reliefs and incentives to be announced in the forthcoming general budget. Foreign institutional investors, who exited en masse in the wake of the recent political uncertainty, will find the market attractive and the inflows will take the market to new highs,” James said.
