M&As show India is still hot spot for foreign investors

Despite concerns on the macroeconomic front, it seems like foreign companies are reviving their interest in India. Not only has there been a surge in foreign institutional investors' interest in India's equity markets this year, but increasing merger and acquisition deals in India are also reflecting investor optimism.

In the last five months, FIIs have deployed $11.8 billion in Indian equities against $8-6 billion in the year-ago period as reallocation of global funds has helped the Sensex to trade at a forward price earnings multiple of 12.


Rising rural wages has propelled consumer-oriented business in India.

Even inbound investments into India such as Qatar's Rs 6,800 crore investments in Bharti Airtel, global consumer-goods giant Unilever's additional 22.5% stake buy in its Indian unit Hindustan Unilever, Abu Dhabi-based Etihad's 24 percent buy in Jet Airways and parent GlaxoSmithKline's $900 million investment in its India-listed subsidiary GlaxoSmithKline Consumer Healthcare suggest that long-term investors are still bullish on India.

Rising rural wages has propelled consumer-oriented business in India. Citing a Morgan Stanley report, a Business Standard report says "Food & beverages sales in India will rise another seven-eight percent, while home and personal care sales will go up four percent, ahead of a rise in disposable income over the next six years."

Others in the consumer durable business are also betting high on India. Japan's Panasonic plans to invest Rs 1,500 crore in India in the next three years, while LG expects that India will be among its top three markets within three years.

Market analyst Adrian Lim of Aberdeen Asset Management continues to remain overweight on Indian market, with a positive view on consumer staples sector. He believes the India consumption story is very much intact.

"There is a lot of good quality growth in the market despite the falling gross domestic product (GDP) numbers over the last year or so. So, although the short-term has been encouraging, our long-term position has been unchanged," he told CNBC-TV18 in an interview.

Another report by HSBC Global Asset Management (HSBC) recently said that emerging markets including China, India and Indonesia will continue to outperform developed world economies in 2013 and 2014.

Herve Lievore, Senior Macro and Investment Strategist at HSBC Global Asset Management said, "As emerging markets have outgrown the developed world, their global influence has also increased, resulting in a shift in the centre of the global economy. Investors should be wary of caveats which include the on-going eurozone crisis, US fiscal adjustment, risks to China's growth outlook and potentially asset price bubbles from excesses that will inevitably get in the way from time to time.

Updated Date: Dec 20, 2014 19:49 PM

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