Smart People: Abhay Aima

SMART EYE/ COUNTDOWN 2005

Abhay Aima

On the third floor of the impressive HDFC Bank House in Mumbai, Abhay Aima, country head, equities and private banking group, HDFC Bank, sits relaxed. The Sensex recorded its all-time high on the previous day and all indications are that the upbeat tone is likely to continue.

"Unless we shoot ourselves in the foot, which we have done historically, the markets are going to do well," says Aima, tongue firmly in cheek. So how does he analyse the year 2004? "At the start of the year we were looking at 6,200 levels (Sensex) by March."

The booming markets and expectations of further reforms in the wake of an expected victory for the BJP-led coalition had his team upping the target even higher at 7,800 by end-FY05.

Then came the mother of all upsets, which handed the election to a Congress-led government. Black Monday followed soon after and all bets were off on how low the markets could sink.

"That election result surprised all of us," says Aima. But the subsequent rally came as a pleasant surprise. "The markets showed a lot of strength in the next months. Swadeshi propaganda had the FIIs sitting on the sidelines for a while. But this was counterbalanced by other forces," notes Aima.

"While FIIs who were overweight on India cut down their exposure to the country, several new foreign investors entered the markets at lower levels; others even increased their exposure. Liquidity was the biggest difference this year."

Aima believes that the FIIs of 2004 are a changed lot. "They are a lot more knowledgeable this time around. While earlier it used to be the India story (that made them think of allocating assets to emerging markets, including India), now they are looking at Indian stories" - meaning they are investing in sectors and companies in the country which hold potential. So what is he bullish on?

"Outsourcing," comes the reply. "It is India's core competency, whether it be in pharma, IT or auto ancillaries." When it comes to sectoral allocations, Aima admits to having gone wrong in a couple of sectors. "Banking surprised us.

We were also underweight on auto at the start of the year. But the sector has done well." So what is his advise for retail investors? "The best way for them is to go in for mutual fund SIPs (systematic investment plans), rather than trying to time the markets," says Aima. But then, who ever learns the eternal lessons of the market? "Though it may sound cliched, fear and greed have been the market drivers in the past and it will be so in the future."