Christopher Wood of Jefferies said in a note that greed and fear believe this is a year where investors should hoard their favorite Indian stocks on weakness, which are Asia’s best long-term structuralists in terms of equities. The story is
So far only the message of those working in the capital Modi government The note said that the administration remains committed to its reform agenda despite the inevitable setbacks created by COVID.
Greed and fear held that the long-term dividends from many of these reforms would become self-evident over time, as was the case with Margaret Thatcher, given perhaps the most dramatic bankruptcy reform in the Indian context. It is an age-old habit of the country’s leading businessmen or ‘promoters’ to treat state-owned banks as their private piggy banks.
“Meanwhile, Narendra Modi’s political position remains as strong as ever, with one observer commenting on greed and fear that he expects the BJP to remain in power for the next 50 years. If this is an extreme forecast, it reflects the prevailing sentiment in the context of the absence of any coherent opposition,” the Greed and Fear note added.
Another positive, according to Wood, is that in the second Modi administration, government accounts have been cleaned up in the sense that much of the previous off-balance sheet financing has been taken over the line in accounting terms.
The Reserve Bank of India (RBI) on Wednesday announced the first inter-meeting rate hike since August 2018, when the central bank raised the headline policy repo rate by 40 bps to 4.4%.
“It was chosen to do so on the same day as the conclusion of the Fed meeting as a confirmation of the point made earlier here and Jefferies India head Mahesh Nandurkar, namely that the RBI was at increased risk of falling behind severely inflation. The curve is moving well ahead of current interest rates,” said Chris Wood of Jefferies.