INSUBCONTINENT EXCLUSIVE:
Indian markets are facing a risk that growing uncertainty about the outcome of the upcoming general elections will lead to a slowdown in
inflows into domestic equity funds, which have been the main driver of the stock market since Prime Minister Narendra Modi was elected in
This is clearly a growing risk in the short term, most particularly as many foreign investors will want to await the outcome of the pending
but the average flow dropped to Rs 8,500 crore during July-December 2018
Mutual funds bought local shares worth Rs 6,800 crore in January and they have been net buyers of shares worth Rs 1,300 crore in February
till Wednesday, data showed.
The issue, Wood said, is not only whether the BJP would win but also that if the BJP is re-elected in a
strategist said whoever governs India in the next five years will enjoy the dividends of significant structural reform implemented by Modi
since 2014.
He said evidence of fiscal deterioration in India continues, with tax collections rising only 7% year-on-year in the first nine
months of 2019-20, but neither the bond market nor the currency market seems unduly alarmed by this, even following the Reserve Bank of
Narendra Modi reelected in the April-May general elections, said Wood.
As for sectors, the CLSA chief strategist said that growth in
nonbanking financial companies (NBFCs) is undoubtedly slowing sharply as a consequence of the shock triggered by default of the triple
A-rated ILFS in September 2018.
With private sector banks looking to take market share from the NBFCs, it is not surprising to hear that
prominent NBFCs are now lobbying to receive banking licences, said Wood.
