India remains best structural
growth story in EMs: JPMorgan
Adrian Mowat, JP Morgan says Indian equities have performed in-line with the Asian peers but it remains the best structural growth story in emerging markets (EMs). This is reflected in that it is a consensus overweight, he adds. He says the government is spending money on roads and has large plans for railway investment. According to him, 2016 median EPS growth is optimistic at 22 percent but even with downgrades growth will be high relative to the region. Mowat says the big swing factor is RBI policy. "Monetary policy is too tight with rising real interest rates suppressing corporate capex and increasing non-performing loans (NPLs). Our economist's forecast is an RBI on hold. If this is correct, growth will disappoint," he explained. With limited catalysts before the Budget, he is downgrading to neutral to a core of high quality names.
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