Goldman Sachs' Jim O'Neil, credited with coining the moniker BRICs to showcase the best growing parts of the global economy, is not as bullish about the 'I' in it, meaning India, as the rest of BR and C are better off. Inflation that ruined the party for India this year may begin to ease in the second half, says O'Neil, chairman , Goldman Sachs Asset Management , in an interview with ET NOW. Excerpts:
Among BRICs, where does India rank with regard to attracting fund flows in the second half of 2011?
I don't think it is quite as obvious as it was in the start of the year when India looked very expensive relative to the other three. Because the Indian market has been the weakest despite strong growth, the valuation mismatch is not quite as distant as it was. But that said it still looks to me as though India isn't a bargain basement whereas Russia still does. China also looks quite cheap. Those two I would tend to favour quite a bit more than India. Brazil relative to India is a bit tricky and I think has a few issues to do with managing part of its cycle serve. India would not be at top of my list but is not so obviously the one to stay away from.
Do you expect a revision in India's GDP growth estimates for FY12 if the price of crude oil rises coupled with food inflation?
If we have further increase in oil and food prices, it would be a surprise. For many emerging economies, the growing conviction is that inflation may peak in H2CY12.
Do you think optimism is back in Indian markets?
Two weeks ago, the mood was almost as grim as it was in early 2009. Last week, we had a great rally and the mood suddenly changes. I am in the camp that believes inflation is close to peaking and if that is true it probably should be pretty easy for markets to rally.
Do you see oil prices appreciate further in coming months?
I don't see that happening. I wouldn't be surprised if oil prices fell a bit further in second half of this year.
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