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India to give 20% returns in 1 year; buy banks: JP Morgan

Adrian Mowat, Chief Asian & Emerging Equity Strategist, JPMorgan said that fall in global crude prices is positive for EMs like India, Indonesia and Thailand. But, a further reduction in prices is unlikely.

In an interview to CNBC-TV18 Adrian Mowat, Chief Asian & Emerging Equity Strategist, JPMorgan shared his views and outlook on the global equity markets.

He said the key focus of the markets will be on the US Federal Reserve meeting this week, where the Fed might announce a closure of QE3. Mowat expects Fed to maintain low interest rates for a considerable period of time. “We will watch for words “considerable time” from the Fed regarding rate moves,” he added.

Speaking about emerging markets, he said JPMorgan is looking to pump more funds into India . The research firm has downgraded Brazil to neutral and recommends moving money from Brazil to markets like India. He expects 20 percent returns from the Indian equity market in next 12 months.

Further he is betting on Indian banks and sees an attractive environment for interest rate-sensitive sectors. He prefers investing in cyclicals like autos and building materials.

Below is the verbatim transcript of Adrian Mowat’s interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy.

Sonia: What is the expectation from the Fed reserve meeting this time?

A: There are two key things that we are expecting. The first is that they will finish Qe3, so the final sort of USD 15 billion of asset purchases will be completed and that they won’t continue.

There was some confusion around that with the St Louis president Mr Bullard suggesting that maybe they should continue it but we don’t see any other support within the federal open market committee for them doing that particularly as the macro economic data was basically tracking what they are expecting.

The other key item to look out for is the wording with regard to interest rates and we still expect them to maintain zero interest rates for a considerable period of time so that language will be seen as important for the market.

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