INSUBCONTINENT EXCLUSIVE:
As India readies to vote in less than two weeks to elect a new government, emerging markets equity strategist Adrian Mowat says a change in
He, however, warned that the equity market may witness some downside if the election delivers a hung Parliament
If we have a surprise in this election, I will definitely see it as a buying opportunity
there is scope for PE expansion in India
The market is factoring in the base case that the present government will retain power, he said
Equity benchmarks Sensex and Nifty are currently hovering at their all-time high levels
But Mowat called it a stock-specific rally
flows from foreign institutional investors (FIIs), Mowat said India is joining the broad emerging markets rally
being net sellers of shares worth Rs 4,262.01 crore in January.
Mowat said for a sustained move in stocks, what is needed is dovish central
banks combined with improvement in macroeconomic data
money policy and foresees one more rate cut later this year
Mowat pegged the repo rate at around 5.75 per cent by the end of this year
The current government has done what it can do in the form of reforms, but global economy has thrown up a lot of challenges over the past
five years, he said.
The implementation of GST is a very long-term structural reform
It has caused near-term disruption
India also faced demonetisation amid slowdown in emerging markets, particularly in China
And there were also headwinds for the Indian economy in the form of higher inflation and higher interest rates, he said.
Mowat advised
investors to stay with private banks rather than PSUs
Recapitalisation is inadequate
