Update on Greece Crisis

In a surprise move, Greece announced referendum on the austerity measures proposed by its creditors and this has sent jitters across global markets. Greece have imposed capital controls and limits on withdrawals. However, we believe that Greece is a much smaller problem than it appears. As far as Indian markets are concerned, we believe that there may be no fundamental impact. Why we feel so:

1. Greece is a small fraction of Euro Area (EA) economy, and overall EA economy is in much stronger position than in 2011-12;
2. Most of Greek debt is now held by the official sector, not the Private sector like in 2011-12; and
3. Eurogroup and European Central Bank have developed substantial financial backstops to limit financial contagion.

The crisis during 2012 had limited impact on Indian markets. Indian fixed income and equity markets mean reverted and posted a recovery immediately. The recovery was set as Greece and Spain didn’t had any impact on India’s interest rate fundamentals.

The current crisis appears to be just a sentimental risk-off event rather than a fundamental one. We believe that the likely impact on Indian markets can be limited and short lived.

We recommend investors to use this as a buying opportunity into equities.

Our top recommendations:
ICICI Prudential Value Discovery Fund
ICICI Prudential Select Large Cap Fund
ICICI Prudential Focused Bluechip Equity Fund
ICICI Prudential Balanced Fund
ICICI Prudential Balanced Advantage Fund

By ICICI Prudential