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The fall in global commodity prices along with easing inflation and a potential cut in interest rates could mean great news for India, Christopher Wood was quoted as saying. Photo: Ramesh Pathania/Mint
The fall in global commodity prices along with easing inflation and a potential cut in interest rates could mean great news for India, Christopher Wood was quoted as saying. Photo: Ramesh Pathania/Mint

India most attractive market from 5-year perspective, says Christopher Wood

According to CLSA's managing director, India stands to benefit the most from the recent drop in crude oil prices

Gurgaon: India is the most attractive equity market in the world from a five-year perspective, Christopher Wood, managing director of CLSA Ltd, Asia’s leading equity broker and investment group focused on institutional broking, said on Monday.

“I have been saying this and I continue to say that India is the most attractive equity market in the emerging market world," said Wood, who is also equity strategist at CLSA Ltd.

“In fact, it is the most attractive equity market globally on a five-year view," Wood said in a media briefing.

India’s benchmark Sensex has risen 32% so far in 2014, making local equities the top performing in the world, with the exception of a few smaller markets.

At 12.09pm, the 30-share Sensex was down 0.33% at 27,953.92 points, while the National Stock Exchange’s 50-share Nifty was trading 0.35% lower at 8,360.45.

India stands to benefit the most from the recent drop in crude oil prices, Wood said. The fall in global commodity prices along with easing inflation and a potential cut in interest rates could mean great news for the nation, Bloomberg quoted Wood as saying.

Against that backdrop, CLSA’s investment strategy includes buying interest rate-sensitive stocks as borrowing costs are set to fall. The brokerage house also remains positive on private sector banks.

Separately, CLSA expects India’s economic growth to surpass China in 2016-17, said Rajeev Malik, senior economist at CLSA.

Malik expects India’s gross domestic product to grow by 5.6% in the current financial year, and at 6.5% in the next. He sees Asia’s third-largest economy growing at 7.2% in the year to March 2017, at a faster rate than larger rival China.

The Indian economy grew at less than 5% in the previous two financial years.

“Structurally, China has to slow down because it has had its day in the sun. India’s day in the sun was delayed, and hopefully will begin to get unlocked," Malik said in an interview, adding that while structural positives exist, implementation remains an issue in India.

“The issue was always implementation and unlocking, which should be better," he said. “How much better is still somewhat uncertain."

It is important to watch what happens beyond the cyclical recovery in India, Malik said.

“But the prize for Prime Minister Narendra Modi is not getting growth back to 6.5% to 7%, it is to actually get it above 8% on a sustained basis," Malik said. “And that is not going to be easy."

Although inflation is easing, the Reserve Bank of India is unlikely to cut policy rates anytime soon, he said.

“In the near term, there may not be a rate cut," Malik said. “But that is not the end of the world."

Bloomberg contributed to this report.

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