DespiteIndia’s current struggles, investing directly in India’s fixed income market will yield returns , Steven O'Hanlon, CIO of Fixed Income at ACPI told CNBC.
"At the moment, the India market is predominantly around the government and quasi-government debt," O'Hanlon said. "There is a corporate market, but it is very small. The real focus for us is around the India government market which is getting a very attractive yieldof around 8.5-8.6 percent."
Although the yield is attractive, there are important risks to consider.
"The risks are, first and foremost, if the central bank backs down on a hawkish view on inflationas we’ve seen in the rest of the world," O’Hanlon warned.
However, he believes that India shows long-term investment potential.
"As long as they’re adamant that they’re going to fight inflation first and growth second, as a fixed income investor, it is a lot more comforting than buying into UK gilts or the U.S. where you know inflation is a secondary issue," O’Hanlon said.
Brent crude is currently hitting all-time highs in India, and energy subsidies have nearly doubled in terms of GDPsince 2007.Page 1 of 2 | Next Page