Asoka Wöhrmann, Co-CIO Deutsche Asset & Wealth Management, on the Indian election and the investment strategy impact.
Modi's opposition poised for India majority
The Bharatiya Janata Party (BJP) has won 336 of the 543 seats in Parliament (272 seats needed for a majority). The results indicate the biggest victory for any single Indian party in 30 years as the BJP stressed its ability to revive Asia’s third-biggest economy. Indian National Congress, which has governed India for two-thirds of the 67 years since independence, is headed for its worst defeat ever.
View on Indian equities
We remain overweight on Indian equities. Given the decisive election results, we expect the market to remain supported.
- Valuation is not stretched yet. Valuation for MSCI India is at 14.5x 2015E forwardP/E, in-line with LT average.
- We will look to add to Indian equities based on our expectation of positive earnings revisions and improvement in macro indicators i.e. current account balance, GDP growth and inflation data.
- We favour companies which are biased to the recovery of the Indian economy and small/mid caps names.
- Continue to stay underweight in IT & HealthcareView on Indian Fixed Income & FX.
- We expect that fund inflows into Indian debt should continue over the next threemonths, as the positive momentum from the election continues to drive flows.
- The lack of alternatives in Asia also makes Indian debt attractive.
- Main risk: execution risk from the new government which is likely to kick in after a few months.
Anke HallmannTel: +49 (0)69 / 9101 4546
Sabina Díaz DuqueTel: +49 (0)69 / 9101 4177
Deutsche Asset & Wealth
With €934 billion of assets under management (as of March 31, 2014), Deutsche Asset & Wealth Management¹ is one of the world's leading investment organizations. Deutsche Asset & Wealth Management offers individuals and institutions traditional and alternative investments across all major asset classes. It also provides tailored wealth management solutions and private banking services to high-net-worth individuals and family offices.
¹ Deutsche Asset & Wealth Management is the brand name of the Asset & Wealth Management division of the Deutsche Bank Group. The legal entities offering products or services under the Deutsche Asset & Wealth Management brand are listed in contracts, sales materials and other product information documents.