SINGAPORE - Indian stocks have just suffered their first quarter of contraction in more than five quarters as the charm of the Indian growth story fades.
Slow growth, the scourge of inflation, rising fiscal deficit and fears of political uncertainty in the world's largest democracy ahead of an election are the key culprits.
Bombay Stock Exchange's benchmark 30-share Sensex lost 3 per cent in the first quarter of this year, making it one of the worst performers among its Asian peers.
So, one could be forgiven for thinking Mr Sanjiv Duggal, HSBC Global Asset Management investment director for India Equities, needs a reality check, given his highly bullish outlook on Indian stocks.
But only until he explains his contrarian stand. "It's good to come in when there's a lot of bad news in the market. That's when you want to buy stocks rather than looking at US stocks that have hit new highs."
He has been managing the HSBC GIF Indian Equity Fund with a fund size of US$3.9 billion (S$4.8 billion) for 17 years.
He believes the Indian economy has bottomed out. "We are not just buying hope. Things have actually improved but the market is not pricing them in."
A cheaper Indian rupee, attractive market valuations, rigorous government reforms and an economy that is turning the corner from cyclical lows are driving Mr Duggal's optimism.