SHOWS: HONG KONG, CHINA (JANUARY 7, 2014) (REUTERS - ACCESS ALL)

AJAY ARGAL, HEAD OF INDIAN EQUITIES, BARING ASSET MANAGEMENT

1. (QUESTION GRAPHIC)

'What are you views on the economic slowdown in India?'

2. AJAY ARGAL SAYING:

'Yes, so we have had these slowdown issues with India for quite some time and those issues remain the same. But it is that the investors have actually looked beyond that, and that is why you saw in spite of all the concerns, the foreigners put in twenty billion dollars of flows and net flows into India. So it is not only about looking at the macro fundamentals or at the GDP growth numbers or even at the earnings numbers for this year because it is known that there isn't going to be any significant growth in neither of these things. And maybe GDP growth itself even for FY2015 is not likely to be significantly different from five percent. So it is that the market participants are looking a bit beyond that. And also within the markets, as everyone has been discussing for so long, the markets are not homogenous thing, you have to focus on individual stocks and in that category you have a lot of stocks which are looking attractive. So you need to focus on specific stocks.'

3. (QUESTION GRAPHIC)

'How will the Indian markets look like leading up to the elections in May?'

4. AJAY ARGAL SAYING:

'Yes, so elections is, it's not about the election results in my opinion, which is what most of the markets participants think. I think whatever be the elections results and whatever parties or combination of parties come to power, it is at least a new way of thinking which will come in. And that is what the market is betting on that once that happens and once the kind of situation we are in, and we know that we have to kick start the investment cycle. There would be policies made because at least it will be a new mandate and they will have that much more force to implement the policies at the beginning of their mandate. So that's what the participants are focusing on and it's actually not about the numbers because numbers will come much later, whether they look at the GDP growth picking up or whether they look at the order flows coming in to the infrastructure companies. That will take maybe even a few months after the election results. But it is just that as we get closer and closer to elections, at least there is a possibility and going by the history, it's a very solid possibility that things would change for the better once the election results are over and once a new government is formed.'

5. (QUESTION GRAPHIC)

'Which asset classes are you most bullish on in 2014?'

6. AJAY ARGAL SAYING:

'Well that is very difficult to say because I am not an expert on the globe. But if you look at India, I think very broadly and if you want to take a broad brush, though its very difficult to generalize. But I think in general the cyclical sectors should outperform the defensive sectors this year. And the primary reason being that there is already too much optimism built into the valuations for the defensive sectors and there is slowdown being witnessed there as well. So for example, you will have had definite slowdown now being witnessed in the consumer staples sector, whereas if you look at the cyclical sectors, it's the other way round. There is too much pessimism and everyone knows and everyone believes and which is rightly so, that 2014 is not going to change order books for infrastructure companies or for capital goods companies. But that itself and the positioning of the various institutional investors is very light in all these cyclical sectors. So from a very broad perspective, I would tend to think that the cyclical sector should outperform defensives this year.'