India would see an accelerated foreign investment flow if the Narendra Modi-government retains power in the upcoming Lok Sabha election 2019 since there would be an expectation of continuity in government policies, according to FPI investment advisor Nandita Parker.
If this government comes back there would be a fair amount of continuity and that will be something that foreign investors would look at very closely, Nandita Parker, Managing Partner, Karma Capital, said in an interview to ET Now this week. If this govt comes back they will hit the road running and there will not be delays in what they want to do next, she said.
In the month of March, foreign portfolio investors have poured in Rs 25,000 crore into Indian stock market. In February, FIIs had bought stocks worth Rs 15,328 crore.
The market will be very watchful of what the next government does in the first 100 days. Foreign investors will keenly watch the budget to be presented in July and the tax policy, Nandita Parker said, adding that there is a room for a tax cut as Finance Minister Arun Jaitley had promised for a reduction in corporate taxes.
The last year 2018 was a very tough year for Indian equities, she said. However, this year would be a strong year for equities, Nandita Parker said, adding that the domestic and global headwinds that the country faced in 2018 are in the process of correction.
“We have a big event ahead of us, some amount of caution is warranted. given that elections are around the corner. It’s just a matter of time when the rally broad bases even more,” Parker told ET Now.
The slowdown in developed economies, lowering oil prices and weak dollar trade are the key factors for pouring foreign investment into the emerging markets. India has been lagging behind but it is trying to play catch up and FII flows are showing that India is in the making of a very solid scenario for the next five years.
Parker said earnings in corporate banks are scheduled to recover very sharply in FY20. Public sector banks have put the pace of non-performing loan accretion behind them. The provisioning will be much lower and they will support the earnings growth story in the fiscal year 2019-20.