Devesh Kumar of CIMB Securities says foreign institutional investors (FIIs) will infuse capital into the country if the Bharatiya Janata Party (BJP) comes to power in three or four of the four states elections.

Also read: Will BJP fare well in Delhi election?



Speaking to CNBC-TV18 on the sidelines of the CIMB India Corporate Day, Kumar says that all political developments will be the triggers for the market.

While FIIs will invest into the market post the state election results, the real money will be committed only post the general elections, says Kumar. He adds that atleast one third of the investors will increase their exposure to India if the BJP comes to power.

Also read: Why mkt raced post 2008 Del, Raj, MP, Chts’grh, Mizo polls



In the past few months, a widespread political paralysis, uncertainity on reforms and an economic slump led to FIIs pulling out their funds from Indian debt markets.

Below is the edited transcript of Kumar’s interview to CNBC-TV18.

Q: How are you approaching markets, we have been resilient, we have managed to hold on to that 6000 level but from here on how do you see it headed?

A: Talking to investors in Singapore we are getting a sense that the conviction in Indian story is still lacking and people want to wait for certain developments before they commit their money and that is where politics also is playing an important role.

Looking at that, we feel that the market after state election results will show one round of reaction and then the final commitment of funds in terms of real money will come post general elections. So, that is what the trend is but India is looking like an under-invested market at this point in time. Fund managers compared the market with their previous peaks and compared with recent times also they are much lighter on their percentage of portfolio invested in India.

That makes a very bullish case for India over a longer-term. So, from here immediate triggers will be the political signals but over next two years market will be on a very strong pace.

Q2: From the Foreign Institutional Investors (FIIs) you spoke to what is the impression you are getting about their attitude to the post election government in Delhi? Will they be seriously rattled if it is a third front government or for that matter if the UPA were miraculously to come back?

A: This is a question that they have in mind and we have got a political commentator with us as well and their main concern is what if non-Congress, non-BJP formation comes to power and then they realize that all the parties in India they have been with one combination or other. So ultimately, it will be on the leadership and not the formation and that is where couple of them, who are risk averse, will like to wait for the final outcome in Delhi before they increase their exposure to India. Some others they feel that between now and elections, if someone takes position then in case of a favourable result there will be a quicker gain.

Q: If the Sunday elections were indeed to throw up a fairly positive opinion in favour of the BJP, do you expect a rush of FII money just to tank up before the big game in the centre?

A: Around one third of those who are waiting, will increase their exposure in India and that will make a bullish case. There should be clear verdicts in all these places or change or continuation. So, if BJP gets three or four on four then it will strengthen the market, there will be more flow of money into India.

Q: What is the view from the corporates themselves, the sense that you get from speaking with them, will they increase their investments on the ground depending on which political party comes? Will things change, will the reality change, what is the feedback from the corporates?

A: Corporates there have seen improvement in recent times to some extent in operating environment and post election they will also feel more comfortable increasing their exposures. In terms of their performance also they feel that now all the issues affecting their operations are getting sorted out and because of that they are more optimistic about coming times independent of political environment. However, they feel that if there is a strong leadership and government at centre, and if all their issues are resolved they are in a position to come out with a better performance.

We have done a very good selection of holding our conference towards the end of the conference season, we thought of creating a mix where some midcap names were also present who have been performing in spite of bad environment. We find that investors are also having a lot of interest in those companies. However, more than that these companies are going to be beneficiaries of next round where the weak ones will find a lot of difficulty and improvement in the environment may result in improvement in balance sheet quality of these companies further.