Fidelity still bullish on India

India remains an attractive investment destination despite recent concerns over inflation and policy risks, according to Fidelity International.

Those concerns have restricted Indian equity growth so far this year, while investors also withdrew money to seek investment in developed markets following stronger growth indicators there, according to the portfolio manager of the Fidelity India Fund, Teera Chanpongsang.

But this trend has reversed somewhat since the start of March, helping Indian equities to stage a recovery, and the nation is the only large global economy besides China expected to continue growing by a high single-digit rate this year, he said.

GDP growth rates of seven to 8 per cent are attractive in the current global context and inflation will have a limited short-term impact as food prices begin to ease, he added.

India is buffered from rising oil prices through a low reliance due to its high coal usage and new oil and gas discoveries, he said.

Chanpongsang remained bullish on India because it is a large domestic-demand driven economy where the main drivers of growth are structural and long-term in nature. Major risks have already been priced into equity valuations and any incremental changes, such as stalled environmental clearances to key mining projects, are positive, he said.