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CLSA sees ‘greatest hope’ for Indian stock markets in Narendra Modi - The Economic Times on Mobile


CLSA sees ‘greatest hope’ for Indian stock markets in Narendra Modi


26 Aug, 2013, 1240 hrs IST





Chris said, “the Indian stock market’s greatest hope is the emergence of Gujarat CM Narendra Modi as the BJP’s prime ministerial candidate.”


A decision to go to the IMF would appear to be political suicide for the current Congress-led government, says Christopher Wood of CLSA, in his weekly GREED& fear.



Listing a number of negatives for the Indian stock markets, Chris Wood of CLSA says: "the Indian stock market's greatest hope is the emergence of Gujarat Chief Minister Narendra Modi as the BJP's prime ministerial candidate."

In his weekly GREED & fear, Chris says the one potential positive amid all the negatives that the country is witnessing is that the gathering macroeconomic crisis could trigger an improvement in governance. "In this respect, it hardly inspires confidence that Congress leader Sonia Gandhi appeared in Parliament talking up her expensive food security bill," he says.

Chris adds, "even as the odds are definitely stacked against him (Modi), the view is simply that the worse the sense of crisis the better Modi's chance of winning. This is why a decision to go to the IMF would appear to be political suicide for the current Congress-led government."

Among the negatives for India listed in GREED & fear are:

Belt-tightening Moves

"The Reserve Bank of India's tightening moves in July, which seem to have been ordered from Delhi in an attempt to shore up the currency, clearly backfired in large part because of misguided communication and conflicting signals. There have also over the past week and more been retrograde steps to impose restrictions on residents' capital outflow. Thus, the limit for outward remittances was lowered from $200,000 to $75,000 per financial year. The result has been a further loss of investor confidence and a further decline in the currency.

Falling Rupee

The currency has depreciated against the US dollar by 5.6% since the (RBI) announcement to 65/$, and is down 15.7% year to date and 31% since the start of 2011. It is also the case that the latest inflation data has also been less than stellar, which has further highlighted the lack of scope for easing. Thus, WPI inflation rose from 4.86% YoY in June to 5.79% YoY in July.

Sovereign Debt Crisis

The result (of RBI moves and falling rupee) is that India remains in GREED & fear's view the Asian market most at risk of a sovereign debt crisis with chatter apparently growing in Delhi of a potential need to sound out the IMF. This is despite the fact that India does not have a debt market reliant on foreign capital given the lack of foreign ownership of rupee debt. Thus, foreign ownership of Indian government securities was only 1.61% at the end of March, though it is up from 0.88% at the end of March 2012. In this sense, India is not directly correlated into emerging market debt dynamics. Where the foreign ownership is, of course, is in Indian equities.


Slower Growth, Rising NPLs

The higher interest rates and the slower GDP growth also imply declining loan growth and rising NPLs (non-performing loans) in the banking system, most particularly in the 'cheap' state owned banks. Current Indian gross NPLs are 3.7% of total loans but there are also another 4.6% of loans which are in the 'restructured' category.

Despite the temptation to buy "cheap" banks on a contrarian basis, GREED & fear will stick with the expensive quality private sector banks geared to the consumer space since it is far from evident that India has passed the worst. It is also the case that the credit problems are primarily in the corporate and related infrastructure space.

Further, Chris says "as nervousness has increased towards emerging markets, the sentiment on Euroland has been improving with the stabilisation of the GDP data for the second quarter based on flash estimates published by Eurostat on August 14. Thus, Euroland real GDP rose by 0.3% QoQ in Q2 of 2013, led by a 0.7% QoQ increase in Germany and a 0.5% QoQ rise in France. This is the first QoQ increase in Euroland real GDP in seven quarters. But on a year-on-year basis, Euroland real GDP still declined by 0.7% YoY in Q2 of 2013, as compared with a 1.1% YoY decline in Q1 of 2013. Meanwhile, European equities have also outperformed since late June. The MSCI Europe Index has risen by 11.1% in US dollar terms since June 24, as compared with a 6.1% increase in the MSCI AC World Index.

Euro Zone Crisis Not Over

While a catch-up rally in European equities is not surprising given the seeming stabilisation in the data ... GREED & fear remains firmly of the view that the Eurozone crisis is not over. Indeed, investors are now as complacent on the Eurozone as they are neurotic about emerging markets.


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Rupee has breached 68

Food security bill to cost 1.7-3% GDP or 11-20% gross collected tax.

Private sector in recession while Public sector would not have jobs for 3-4 years due to raising of retirement age from 60-62.

A whole generation is doomed.
 
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Indian economy is in turmoil, why not hold early elections and bring Modi to power? The rate at which the stock market and the Rupee is plunging, India's GDP would soon reach 1 trillion.
Hold early elections and get rid of the current Government.
 
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This is not a place to discuss internal politics of India
 
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ok......:smokin: thats bound to happen but what my worry is they can do worse to the economy by that time
 
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WTH is CLSA and what does this Chris guy know more about India than us? Economic times proved that it is a Times group newspaper.
 
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WTH is CLSA and what does this Chris guy know more about India than us? Economic times proved that it is a Times group newspaper.
Christopher Wood

Described by London’s Telegraph newspaper as ‘the first to predict the US sub-prime meltdown’,[7] Christopher Wood is best known for his weekly GREED & fear newsletter. He’s been ranked No.1 Asian equities strategist every year since 2002 by either Asiamoney or Institutional Investor and usually by both. A former finance journalist with the Far Eastern Economic Review and The Economist, Wood is also the author of Boom & Bust, The Bubble Economy and The End of Japan Inc. He also wrote the CLSA milestone research report, The Real Pacific Century: Asia’s Billion Boomers.

Better than a turd sitting behind a desktop and typing BS from a remote corner of India.:woot:
 
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Indian economy is in turmoil, why not hold early elections and bring Modi to power? The rate at which the stock market and the Rupee is plunging, India's GDP would soon reach 1 trillion.
Hold early elections and get rid of the current Government.

Most of the Educated,sensible indians are saying this only
 
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Indian economy is in turmoil, why not hold early elections and bring Modi to power? The rate at which the stock market and the Rupee is plunging, India's GDP would soon reach 1 trillion.
Hold early elections and get rid of the current Government.

Because most of the MPs that continue to hold support for UPA government are from 'outside' meaning they are bought over. The government ruling the state of Uttar Pradesh is one. UP is currently the most backward state in the country thanks to this state government and it is known for its ruthless corruption, bullying, communal vote bank and aggressive vandalism.

To bring early elections is what the educated and aware Indians want. Whereas parties like Congress and its allies like SP rely on appeasing Muslim seminaries and bodies, Christian missions, Marxist 'intellectuals', giving free handouts to beggars/other such people who are told to simply vote for Congress.

Since most educated and aware Indians are disgusted by politics, they don't vote. Which makes these other appeased groups come in and vote for Congress into power.

Sadly, this is the problem.
 
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Better than a turd sitting behind a desktop and typing BS from a remote corner of India.:woot:
Pfft. Christopher Wood is no economist and no political analyst. He is a finance guy, yeah sure. But still, not an economist. Just look at the kind of headlines generated and the analysis inside.
 
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Because most of the MPs that continue to hold support for UPA government are from 'outside' meaning they are bought over. The government ruling the state of Uttar Pradesh is one. UP is currently the most backward state in the country thanks to this state government and it is known for its ruthless corruption, bullying, communal vote bank and aggressive vandalism.

To bring early elections is what the educated and aware Indians want. Whereas parties like Congress and its allies like SP rely on appeasing Muslim seminaries and bodies, Christian missions, Marxist 'intellectuals', giving free handouts to beggars/other such people who are told to simply vote for Congress.

Since most educated and aware Indians are disgusted by politics, they don't vote. Which makes these other appeased groups come in and vote for Congress into power.

Sadly, this is the problem.

Exactly. Politics are disgusting because, we the educated lot don't go out and vote to keep the disgusting candidates out. Sadly for India, if that does not change this time, dark ages are not far away. It is going to get even more disgusting. Beating Supreme Court's decision, Congress has even changed the law to make it easy for criminals to contest elections.
 
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I wonder if Modi is really a doctor of economics who can fix the country's woos easily.
 
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I wonder if Modi is really a doctor of economics who can fix the country's woos easily.

Bad governance is the root cause of our economic woes. Also policy indecisiveness has driven away prospective investors. Add to that is the huge list scams. Modi is known for corruption free governing style in the state of Gujarat. Once he becomes the PM investor confidence will be restored.
 
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I wonder if Modi is really a doctor of economics who can fix the country's woos easily.

Listen the last time Mr.Modi visited Hyderabad for a speech where we paid 5rs.ticket each to see and hear.He had a hearty talk with all the industrialists and filmi people.We know how how many projects and investments we lost in our state just cos Mr.Modi assured them a safe haven in gujarat!
WTF?my CM has to do atleast something!
 
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Lol PDF has been reduced to promoting modi and BJP now a days
 
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