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Indian economy has passed the stress test: Nagpal

Source: IRIS (02 November 2009)

Indian economy has passed the stress test: Nagpal
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Gajendra Nagpal is the founder & CEO of Unicon Financial Intermediaries (P), a financial services company, which has emerged as a one-stop investment solutions provider. He is well respected in the industry for his stock broking experience. Prior to founding Unicon, Nagpal has held senior positions at the regional and national levels with Kotak Securities and Indiabulls. Nagpal is a management graduate by qualification. In his spare time he likes to swim and listen to old Hindi film music. In an exclusive interview with Pooja Chopra of Myiris.com, he provided insights into the India growth story, the state of the economy and what will it take for the country to grow strongly and sustainably in the future.

> Can you tell us about Unicon Financial Intermediaries and its mission & services?
Unicon is a financial services company which has emerged as a one-stop investment solutions provider. The company is headquartered in New Delhi, and has its corporate office in Mumbai with regional offices in Kolkata, Chennai, Hyderabad and Noida. The company is formed with a mission to create long term value by empowering individual investors through superior financial services supported by culture based on highest level of teamwork, efficiency and integrity. Unicon can boast of some of the most respected names in the private equity space like Sequoia Capitals, Nexus India Capital and Subhkam Ventures as its shareholders.

> Please share with us your long term view on the investment opportunity that is presented by the Indian stock markets.
Indian stock markets have given significant returns over the last 5 years and the outlook is quite promising as well. India is one of the few economies which are expected to grow at a good pace. Given that economy is expected to grow at around 8-9% over the next few years, there is scope for corporate profits to grow at 15-18%. Overall one can expect 15-20% CAGR growth in the equity markets over the next 5 year period.

> What is you view on the Indian economy? Over the five to ten years` perspective, what are the challenges that we face and how do you see India performing?
Indian economy has showed that it is resilient and it has passed the stress test. Burgeoning middle class, higher spending ability and positive demography will aid India in continuing to grow. The challenge is infrastructure and implementation of infrastructure, implementation of growth oriented reforms, challenge is to create jobs for workforce and ensure that larger populace is participating in the India growth story.

> What is different in this current stock market rally as compared to the previous ones?
The current rally has come on the back of a very sharp correction which happened last year. One of the major differences as compared to the previous rallies is that there has been much wider participation and also the fact that the sectors which lost substantial ground in the fall have also been equally instrumental in fuelling the current rally.

> How much of a correction do you foresee for the Indian stock markets?
There is a fair possibility of a 10-13% correction in the Indian stock markets given the sharp run up which we have seen.

> Which sectors are you buoyant on, both on a global basis as well as in India in the long term?
From a longer term perspective, banking, infrastructure, FMCG, pharma are some of the sectors which are poised to do well.

> What is influencing the success and returns of today`s commodities markets?
While the longer term outlook of commodities is dependent on demand supply scenario, the short term trends are influenced to a large extent by liquidity. Also dollar weakness has led to a shift of money towards commodities which has led to returns in commodities.

> According to you, which commodities will have good investment opportunities in 2009-10 - gold, oil, industrial metals, agro commodities?
The longer term outlook of agro commodities appears to be quite good as inventories in agro commodities are at multiyear lows. Given the overall view of weakness in dollar from a longer term perspective, gold, crude should offer good investment opportunities.

> On a lighter note, your favorite books/ personalities that have influenced you the most?
The books that have influenced me the most are - `Alchemist` by Paulo Coelho and `Good to Great` by Jim Collins; while the personalities who have influenced me the most are - Nelson Mandela, Mahatma Gandhi and Sachin Tendulkar.

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