06 May , 2022 By : Kanchan Joshi
Greed & fear continues to believe that this is a year where investors should accumulate their favourite Indian stocks on weakness in what remains Asia’s best long-term structural story in terms of equities, said Jefferies' Christopher Wood in a note.
So far only in the capital, the message from those working for the Modi Government is that the administration remains committed to its reform agenda despite the inevitable setbacks triggered by Covid, the note stated.
GREED & fear continues to believe that the long-term dividends from many of these reforms will become self-evident over the due course of time, as was the case with Margaret Thatcher, with perhaps the most dramatic in the Indian context being bankruptcy reform given the previous ingrained habit of the country’s major businessmen or ‘promoters’ to treat the state-owned banks as their private piggy banks.
“Meanwhile, the political position of Narendra Modi remains as strong as ever with one observer commenting to GREED & fear that he expected the BJP to remain in power for the next 50 years. If that is an extreme forecast, it is reflective of the prevailing sentiment in terms of the absence of any coherent opposition," the Greed & Fear note added.
Another positive, as per Wood, is that the government accounts in the second Modi administration have been cleaned up in the sense that a lot of previous off-balance sheet financing has been moved above the line in accounting terms.
The Reserve Bank of India (RBI) on Wednesday announced the first inter-meetingrate hike since August 2018 when the central bank raised the headline policy repo rate by 40 bps to 4.4%.
“That it chose to do so on the same day as the conclusion of the Fed meeting was confirmation of the point previously made here and by Jefferies’ head of India research Mahesh Nandurkar, namely that the RBI was at growing risk of falling severely behind the curve with inflation running well ahead of prevailing interest rates," Jefferies' Chris Wood added.
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