FII Mover and Shaker of Indian Equity market, BOFA Merrill Lynch hosted an investor conference at which ministers in the Narendra Modi Government (Nitin Gadkari and Jayant Sinha), senior bureaucrats and nearly 40 companies participated.
Overweight India – Global Investors are overweight on India. GEM funds are nearly 420 bps overweight India BoFA’s view is that this makes India vulnerable to any near term global correction. India remains the most owned market in GEM by a wide margin.
Changes on the Ground ? In the near term nothing appears to have changed on the ground was the opinion of most of the industrialists. After the Corrupt Congress regime was thrown out of power, the pace of economic recovery as well as earnings recovery will disappoint investors near term. Investors, post their company meetings, seem to agree that valuations were probably pricing in too much of good news.
Defence, Railways & Infrastructure – Road to Recovery Defence Panel expects USD 100 Bn of new orders. There is a a clear roadmap to increased spend in sectors like roads, railway and defense. This accompanied by rate cuts would drive the recovery in India. In roads, we are now seeing 11km/day being built compared to 2 km/day in 2013. This is likely to rise to 30 km/day by 2017. The Ministry of Railways is planning a $138 bn capex over next 5 years.
BoFA is bullish on India with an index target of 54,000 by end-2018 and believe that Investors must await dip in the market.