04 October 2010

Edelweiss: India Strategy - ride the tiger

Bookmark and Share


  Facing weak domestic demand, US  and Europe are looking for weaker currencies to support trade sector
  However, China is reluctant to allow meaningful RMB appreciation (Japan also worried about JPY appreciation). This could lead to trade tensions building up
  For financial markets, it is concerns on growth Vs comfort of liquidity
Economic momentum in India remains on a strong footing
  Robust industrial growth and healthy monsoons to sustain the growth momentum
  Inflation concerns are easing; RBI embarking wait and watch approach
  Credit growth on a recovery path; to further accelerate in H2FY11
However concerns remain
  BoP situation remains a concern, with current account deficit on a widening  trend
  Paper issuances an overhang but FII flows to remain supportive
  Valuations vis-à-vis EMs appear higher but pace of earnings revisions also stronger
India on strong footing; growth propelled by consumption and capex
  Consumption expected to be boosted by strong monsoons, easing inflation and rising salaries
  In capex, power continues to be the dominant part with focus now shifting to operational capex such as mining and material handling, transmission towers, etc
Sectors to play
  Consumption: autos, media, airlines, real estate
  Capex: Material handling, earth moving equipment for mining, transmission towers for power evacuation

No comments:

Post a Comment