A monitor shows stocks rallying while a trader talks on a phone on the trading floor of the Motilal Oswal Financial Services Ltd. office in Mumbai, India (Photographer: Vivek Prakash/Bloomberg)  

Alpha Moguls: Morgan Stanley’s Swanand Kelkar Explains Why Investing In India Is Easier

India’s stable growth makes investing easier regardless of domestic and global concerns.

That’s what Swanand Kelkar, managing director at Morgan Stanley Investment Management, said on BloombergQuint’s special series, Alpha Moguls. And he’s not overly worried about valuations.

“When you want to go out and buy, things are not cheap. When you are scared and want to invest in fixed deposits is when things are cheap,” said Kelkar who oversees $3 billion worth of India investments. “That’s the universal answer to the question on valuations.”

Kelkar is bullish on the India story. The nominal gross domestic product has been growing in double digits for the last few years. That makes the job of an investor “very easy”, compared to similar-sized economies around the world, he said.

In my portfolio, I don’t have Nifty futures. I have stocks and that is what I look for – stocks that can grow.
Swanand Kelkar, Managing Director, Morgan Stanley Investment Management

Kelkar says there are a number of investment options which will deliver 15-20 percent annualised returns for the next few years.

Morgan Stanley’s asset management arm doesn’t rely on event-based investing. For that, “you have to get two things right – the event, and the market reaction to the event. And that is a game that we have opted not to play.”

For him, concerns over geopolitical events always exist in the background. What’s worrisome is unusually low volatility in the markets, both global and local. The fears are not unfounded.

A spell of low volatility preceded crashes in about two-thirds of 40 asset bubbles studied by researchers including Didier Sornette at the Swiss Finance Institute, Bloomberg reported in August.

In India, Kelkar said one of the biggest concerns has receded: the health of public sector banks. He is not sure if the fiscal discipline will stay, and whether jobs creation and availability will live up to the needs.

Morgan Stanley Investment Management’s Bets

  • Corporate lenders and select non-banking financial companies. It takes India’s risk premium down a notch, and that may attract foreign investors, Kelkar said.
  • The investment manager is looking at selectively upping the ante on domestic-centred pharma companies.
  • He is anti-consensus and sceptical about insurers’ valuations.
  • While Kelkar doesn’t see a threat from Netflix and Amazon Prime to content creators in the foreseeable future, he finds it difficult to predict their growth. So, he's not betting on them either.

Watch the full interview here.