“The mood in the Indian and global equity markets remains quite somber, despite the recent gains. The developments over the last six months or so have led to increased focus on the negative factors and pessimism. We believe that in periods like these, one needs to take a hard look at the facts, fundamentals and the future potential,” says Sivasubramanian KN, Chief Investment Officer, Franklin Equity–India, Franklin Templeton Investments (FTI).
“While data is clearly pointing towards a slowdown, India remains relatively better positioned in terms of growth rates,” according to FTI June 2012 report.
Sivasubramanian says, “We believe the economic cycle as well as the earnings cycle are bottoming out. Corporate India’s track record, book value trends and lower leverage provides comfort and leading companies are well placed to take advantage of any economic upturn.”
While the rupee has depreciated, the fall needs to be seen in the context of increased global aversion and that it is in line with the pressure on EM (emerging market) currencies. History clearly suggests that as the investment horizon increases, the return potential in equities improves and staying on the sidelines only hurts an investor’s portfolio.
“More importantly, in recent years, we have seen a section of investors clearly increase exposure to equity funds during market corrections. India’s long term drivers remain intact and should lead to increased wealth creation in the years to come,” added the FTI report.