India: Better growth in next few years – Standard Chartered

Investors remain constructive on India and expect better growth in next few years on recent reforms, but they do not rule out the risks of rate hikes amid higher crude oil prices, pre-election fiscal slippage, points out Anubhuti Sahay, Head of South Asia Economic Research at Standard Chartered.

Key Quotes

“Clients remain broadly constructive on India’s economy and see better growth prospects over the next few years. While there was broad consensus that macro stability indicators have peaked, rising inflation and the widening current account (C/A) deficit are seen as signs of normalisation rather than deteriorating fundamentals. Risks ahead of a heavy election calendar were viewed as part of the political cycle that exists for several other EM and DM economies as well.”

“Most clients find current IGB yield levels attractive and believe that most of the bad news is already priced in. However, fragile sentiment in the rates market has kept them cautious, and the recent rise in crude oil prices has added to this caution.”

“Some clients were curious about the implications of India’s inclusion in the monitoring list of the latest US Treasury report, especially amid the recent Indian rupee (INR) weakness.”