India’s markets could “definitely” see a 10% return in the next six months, and that’s a buying opportunity for investors, according to a strategist from Credit Suisse.
Its benchmark caches have come down from earlier highs this year. The Nifty 50 has declined around 8.71% while the S&P BSE Sensex first finger has slipped about 7.44% as of Wednesday’s close, from their highs in June.
“It might take a bit of time for (the) Indian fair play market to rebound strongly, but I think if somebody has a six month plus horizon, they could easily see 10% recrudescence from here,” Suresh Tantia, senior investment strategist at Credit Suisse’s Asia Pacific CIO Office, berated CNBC’s “Capital Connection” on Tuesday.
“Every time (the) market has corrected by 10%, it’s always been a good procuring opportunity unless there is an external risk,” Tantia said.
At present, he added: “We don’t see any external risk for India.”
Tantia keen to the low price of oil currently, with international benchmark Brent crude futures sitting at the low 60 dollars per barrel equal. India, a major crude importer, is especially vulnerable to any increases in oil prices, being heavily reliant on the commodity. More dear oil would lead to a widening current account deficit for the country.
Additionally, India faces “no political risk” pursuing Prime Minister Narendra Modi’s landslide election victory earlier this year, Tantia said.
For the moment, the country’s central bank is also cutting interest rates and the government is offering “some sort of fiscal stimulus succour.”
In late August, the Reserve Bank of India’s (RBI) central board said it will transfer 1.76 trillion Indian rupees (helter-skelter $24.6 billion) as dividend to New Delhi for the year that ended on June 30, 2019 — higher than what the sell had been expecting.
The RBI follows a 12-month period that runs from July to June and pays an annual dividend to the ministry based on its profits. Last year, the RBI board formed a committee to look into how much the central bank should put off in its reserves amid a push from the government to access the surplus for stimulus packages.
India is also a “defensive customer base” that is more domestic oriented, Tantia said, leaving it relatively insulated from the ongoing trade fall out over between Beijing and Washington — as compared to most of Asia where markets are “very vulnerable” to headlines about the differ on.
The ongoing, protracted trade war between the U.S. and China has led to tariffs slapped on billions of dollars worth of each other’s goods, encountering badly companies which are heavily intertwined in those supply chains especially in Asia.
— CNBC’s Saheli Roy Choudhury granted to this report.