India most attractive equity mkt in 5-yr view

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India remains most attractive among emerging equity markets globally in a five-year view, Christoper Wood, managing director at CLSA, said on Monday as he stamped his approval on the NDA government's reforms drive.The stock market hit a fresh high on Monday on the back of robust economic data and hopes of a revival in the banking space. The stock market has been consistently scaling new highs after the installation of a stable government and on optimism of an economic revival. “I have been saying for months and I continue to say India remains the most attractive equity market in the emerging market world in fact it is the most attractive equity market globally in a five year view,“ said Wood.

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The renowned equity strategist at one of Asia's top brokerage and investment groups also backed the measures taken by the Narendra Modi government and was optimistic about a pick up in the investment and growth cycle. “I am completely happy with the government. A lot of people say the government has not done enough but I don't understand that,“ said Wood, adding that he went more overweight on India after the election results, which were “much more conclusive than anticipated.“ Some investors have raised doubts about the pace and direction of economic reforms but a majority vouch for the medium and long-term potential of the Asia's thirdlargest economy after the BJP was swept to power in the general elections. Wood, who is in India to interact with investors, expects the e-commerce growth story to unfold in India as more Indians log in and smartphones become affordable. He cited the example of China where e-commerce boomed due to smartphones and better connectivity in the past 5-10 years.

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As growth picks up, Wood expects several sectors to become attractive from an investment point of view apart from the private sector banks, which he strongly backs. “I think cement will be attractive, infrastructure companies that are not too leveraged will be attractive. I think the auto sector and real estate have to be obvious beneficiaries of rate cuts, so do commercial vehicles,“ he said “But then you have the high beta area of e-commerce where you only have three existing listed players. On a five year view, I can see an awful lot of activity in terms of companies in this area coming into the market,“ said Wood.

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He said Modi is expected to continue his reform drive and hoped that there would be progress in the land acquisition law. “The biggest risk is something happens to the Prime minister. That's a far bigger risk than US rate hikes or China slowing, by comparison. These are almost irrelevant,“ said Wood, when asked about the biggest risk factor for Indian markets.“So, I would say the longer Mr Modi is around to get the direction changing then that becomes less important. The key point is to set in motion the changes,“ he said.

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