Despite BJP not getting a clear mandate in the recently held Karnataka assembly elections, Prime Minister Narendra Modi is all set to lead his party to victory in the coming 2019 general elections, a global brokerage said. In his weekly newsletter, CLSA’s Christopher Wood said that Karnataka election results were a marginal negative of investors, and the base case remains that Narendra Modi’s party will win a second term in 2019. However, Wood also cautioned in his newsletter “GREED & fear” that it’s still early to focus on Indian politics before the fourth quarter. A recent report by another global brokerage UBS had also said that Modi government is most likely to return to office in 2019. “We met with more than 50 investors in the US/EU over the past month. Our meetings indicated many investors have priced in a “Modi win in 2019” as the base case,” UBS had said in the report.
Christopher Wood also said that the foremost risk to Indian investors in equities, from a US dollar return perspective, come from the surging oil price. The prices for global benchmark Brent crude climbed above $80 a barrel on Thursday.
Earlier in the April this year, Chris Wood has said that India’s growth story would take a beating if Prime Minister Narendra Modi is not re-elected in 2019. “The Indian story would, in GREED & fear’s view, be badly damaged if the formidable Narendra Modi was not re-elected. India remains the best long-term story in Asian equities out of all the Asian markets covered by CLSA,” Chris Wood, equity strategist at CLSA had said in his Greed and Fear report.
The report had also said that due to bond market sell-off, continued decline in rupee, rising crude oil prices and surging current account deficit (CAD) has not allowed India to become the flavor of the month so far in 2018. “There is also talk of fiscal slippage amid fears of resurgence of populism ahead of general election,” he had then said.
In his interview with ET Now in April, Chris Wood had also shown optimism on housing theme and residential real-estate stocks. “The areas I want to play most are affordable housing in India which is a five-year story and I want to play the real estate sector based on the consequences of this RERA legislation which I believe will lead to a healthy consolidation,” he had said.