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■ Silent transformation continues. Even though expectations on the pace of
central government reforms are now moderating (as they should), we stay
positive on India's growth. With prosperity decades behind other emerging
markets (e.g., Mexico was like India in 1976, Brazil in 1983), there's
significant room for catch-up. Growth, already under-reported, should
continue, as India's Silent Transformation picks up, with technology (e.g.,
ATMs and mobile broadband) helping leapfrog constraints on infrastructure;
and as reforms at the state level—which matter more—are accelerating.
■ Rates, pent-up demand, currency. We highlight several growth themes for
investors: (1) Even as the repo rate remains unchanged, a high BoP surplus
and slow loan growth could drive system surplus funds to their highest ever
level and wholesale rates could fall; (2) the bottoming in the economy's growth
could unlock pent-up demand in several consumer discretionary categories
(not just autos); and (3) the lagged effects of the rupee's fall are opening up
opportunities in import replacement and exports.
■ Stay constructive. With the market at an all-time high, many investors are
turning cautious. We, however, still believe risks to the market remain global,
not local. India has primarily gained from a global expansion of P/E multiples:
elections just reduced tail risks. Index EPS growth could pick up to 11-12%
from 7-8%, and a 30% return for the index over two years is quite likely even if
the investment cycle disappoints. We highlight Maruti, TCS, Axis, HCLT, RIL,
ITC, Titan, Indus Ind, Shriram and Emami as our picks.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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■ Silent transformation continues. Even though expectations on the pace of
central government reforms are now moderating (as they should), we stay
positive on India's growth. With prosperity decades behind other emerging
markets (e.g., Mexico was like India in 1976, Brazil in 1983), there's
significant room for catch-up. Growth, already under-reported, should
continue, as India's Silent Transformation picks up, with technology (e.g.,
ATMs and mobile broadband) helping leapfrog constraints on infrastructure;
and as reforms at the state level—which matter more—are accelerating.
■ Rates, pent-up demand, currency. We highlight several growth themes for
investors: (1) Even as the repo rate remains unchanged, a high BoP surplus
and slow loan growth could drive system surplus funds to their highest ever
level and wholesale rates could fall; (2) the bottoming in the economy's growth
could unlock pent-up demand in several consumer discretionary categories
(not just autos); and (3) the lagged effects of the rupee's fall are opening up
opportunities in import replacement and exports.
■ Stay constructive. With the market at an all-time high, many investors are
turning cautious. We, however, still believe risks to the market remain global,
not local. India has primarily gained from a global expansion of P/E multiples:
elections just reduced tail risks. Index EPS growth could pick up to 11-12%
from 7-8%, and a 30% return for the index over two years is quite likely even if
the investment cycle disappoints. We highlight Maruti, TCS, Axis, HCLT, RIL,
ITC, Titan, Indus Ind, Shriram and Emami as our picks.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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