It has been a fantastic run in the Indian markets, the fundamentals are improving and earnings are improving, said Hugh Young, Managing Director-Asia Pacific Region at Aberdeen Standard Investments. He believes the stock prices have run extremely hard and fast.

Share Market Live

NSE

"Our caution tends to be on the valuation side and this is reflected in many other global markets where markets are at all time high as valuations are high,” he said in an interview with CNBC-TV18.

He added that China remains the biggest competition for India.

“We have seen very strong China markets. But now India has also had a very strong run. So it is hard to choose between the two. Together for us, for our Asia-Pacific ex-Japan funds, the two represent half our exposure,” he pointed out.

He further stated that this year is generally going to be far better year for economies and corporate earnings though the caution remains on prices.

According to Young, Indian insurance sector isn’t the cheapest sector but sees long-term growth in the space. He also believes there is a lot more to go for the banking sector and his preferred stocks from the private banking space are Kotak Mahindra Bank and HDFC Bank.

In terms of State Bank of India (SBI), he said, “It has done extremely well. We have looked at it closely but always preferred to stick with the private financial institutions, likes of Kotak Mahindra Bank and HDFC Bank.”

Going ahead, he believes geopolitical risks will possibly raise their head again.

“The fundamental issues between US and China remain and US President Joe Biden is not going to back down on that. So that will be a global tension that we see,” he mentioned.

According to Hugh, the biggest visible risk is on the interest rate front, the money front. “If we see interest rates rising, money becoming a bit tighter that will be the biggest logical risk to markets if market ever operates logically,” he shared.

Watch the video for full interview.

(Edited by : Pranati Deva)