Concerned about liquidity in India: Morgan Stanley

Malcolm Wood, Asia-Pacific Equity Strategist of Morgan Stanley says that the Asian markets are seeing domestic liquidity, after the resumption of FII interest.

He adds that higher valuation for Asia is justified since there are concerns about pace and all measures of risk appetite is quite high across Asia and they won''t need a bad news to push the Asian markets further down.

On India, Wood says that there are concerns on the liquidity and the RBI will need to tighten the rates more. He feels that the India valuations are extremely high, which is justified by strong growth.

CNBC-TV18 shares with domain-b its exclusive interview with Wood:

What is behind this optimism in global markets, because it has turned around completely in the last one month, US is at new highs, most Asian markets are at new highs, what do you think has changed in the last 30 days?
From a US perspective, there are a couple of things. One we have had better than expected CPI number last week. A couple of weeks before that, the employment numbers were better than expected. So some of the fears, at least in the short term, about the US have been settled. Besides, more recently, we have had a reasonably constructive reporting season from US companies.

What about Asia though, because Asia has been even stronger?
Exactly. The added feature in Asia is the liquidity that is in our markets; we are certainly seeing lots of domestic interest in equities as well as ongoing or resumption of foreign interest in our markets.