With no signs of a pick-up in the investment cycle, India is not a great investment story, said Christopher Wood, CLSA’s Asia- pacific chief equity strategist.
Chris Wood said that a turnaround in the investment cycle may be required for India to outperform its Asian peers.
“If the investment cycle picks up, India could become the best equity story in Asia,” he said.
Wood regards the current high value of BSE Sensex as misleading and said that FIIs have been investing only in the high quality, high valued Indian stocks.
While he acknowledged that the current value of the rupee is cheap, Chris Wood said that the domestic currency would have weakened more if FIIs had started to exit the equity market.
Chris Wood expects the Indian market to face the risk of more interest rate increases amidst sticky inflation and add that the RBI is constrained due to lack of support from the fiscal side.
”Even the political developments in the next six months may add to volatility,” Chris Wood added.