Viresh Metha, Investment Director, HSBC Global Asset Management shares his outlook on India in 2012

Viresh notes two particular macrotrends for India
1) moderating inflation and 2) falling interest rates to stimulate economy.
While Indian markets have rallied, valuations are still reasonable versus mid to long term averages. Positive drivers include
1) India's fiscal deficit, while high, is in line with historical averages,
2) the RBI's rate cuts are higher-than-expected, which have a stimulating effect on the market
Risks include:
1) government inaction and policy risk could fail to stimulate the economy,
2) high oil prices could lead to a weakening ruppee and
3) rising inflation.
Portfolio wise, he is positive on sectors such as banks, automobiles and consumer sectors. He is also positive on the infrastructure sector, but this is dependent on government policies.