Christopher Wood expects the BJP government to offer fiscal stimulus in next month's budget and sees room for the central bank to cut interest rate by at least two percentage points over the next two years.
For him, India under Prime Minister Narendra Modi remains the favourite equity story globally.
The prime minister's willingness to issue ordinances on key policy reforms gives the clearest signal that he wants to get things done, Wood wrote in his widely followed report Greed and Fear, published on Friday by the Asian equity brokerage and investment group.
India is a wonderful market for global investors — not just for emerging market investors — who want to diversify their portfolios, he said. Wood predicts the budget to comprise surprise steps to stimulate the economy.
From the Reserve Bank of India, he expects "many more interest rate cuts" as inflation collapsed to 5% in December 2014 from 11.2% in November 2013.
The RBI, which had resisted demands for rate cuts for long citing sticky inflation, lowered its key policy rate by a quarter percentage point to 7.75% last week.
The stimulus in the budget will be investment-driven and not subsidy-driven, though the government may remain relatively conservative on the fiscal front, he said.
According to Wood, the risk for Indian equity story may also come from investors — those who may become impatient waiting for evidence of a cyclical recovery, most particularly a private sector-led investment cycle.
There is lot of scepticism from investors about whether Modi will introduce real reforms, particularly as the BJP doesn't control the Rajya Sabha. The BJP-led ruling coalition has only 24% of the seats in the Upper House, compared with 63% in the Lok Sabha.
The most important task facing Modi, according to Wood, is making the existing government machinery work. Certain legislative initiatives would represent significant progress if enacted, he said.
Examples include the longawaited introduction of the goods and services tax and recast of the land acquisition legislation.
The willingness of Modi to issue ordinances — after disruption in Parliament proceedings prevented the government from pushing through bills — is seen as the clearest of signals that he wants to get things done.
The rupee's appreciation on a rate cut at a time when the dollar is strengthening is a signal that acceleration in growth is coming, Wood said.
indiatimes.com
For him, India under Prime Minister Narendra Modi remains the favourite equity story globally.
The prime minister's willingness to issue ordinances on key policy reforms gives the clearest signal that he wants to get things done, Wood wrote in his widely followed report Greed and Fear, published on Friday by the Asian equity brokerage and investment group.
India is a wonderful market for global investors — not just for emerging market investors — who want to diversify their portfolios, he said. Wood predicts the budget to comprise surprise steps to stimulate the economy.
From the Reserve Bank of India, he expects "many more interest rate cuts" as inflation collapsed to 5% in December 2014 from 11.2% in November 2013.
The RBI, which had resisted demands for rate cuts for long citing sticky inflation, lowered its key policy rate by a quarter percentage point to 7.75% last week.
The stimulus in the budget will be investment-driven and not subsidy-driven, though the government may remain relatively conservative on the fiscal front, he said.
According to Wood, the risk for Indian equity story may also come from investors — those who may become impatient waiting for evidence of a cyclical recovery, most particularly a private sector-led investment cycle.
There is lot of scepticism from investors about whether Modi will introduce real reforms, particularly as the BJP doesn't control the Rajya Sabha. The BJP-led ruling coalition has only 24% of the seats in the Upper House, compared with 63% in the Lok Sabha.
The most important task facing Modi, according to Wood, is making the existing government machinery work. Certain legislative initiatives would represent significant progress if enacted, he said.
Examples include the longawaited introduction of the goods and services tax and recast of the land acquisition legislation.
The willingness of Modi to issue ordinances — after disruption in Parliament proceedings prevented the government from pushing through bills — is seen as the clearest of signals that he wants to get things done.
The rupee's appreciation on a rate cut at a time when the dollar is strengthening is a signal that acceleration in growth is coming, Wood said.
indiatimes.com
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