Zurich-based Vontobel Asset Management is cautious on Indian equities but is bullish on the country's sovereign bonds and finds the rupee to be an appealing carry trade currency.
The MSCI India index, which covers approximately 85 per cent of India's equity assets, trades at an average 12-month forward price-to-earnings (PE) ratio of 22.8, well above the PE ratio of 12.08 for MSCI's emerging market stocks.
Indian government bonds represent an attractive diversification while the central bank's FX policy of stabilisation makes the rupee one of the best risk adjusted carry trades, Carl Vermassen, a fixed income portfolio manager at Vontobel, said.
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