India favourite investment destination, eye Budget
Brian Jacobsen, Chief Portfolio Strategist, Wells Fargo Funds Management
Jan 27, 2017 | Source: CNBC TV 18
India still remains one of my favourite areas to invest, not just in the emerging markets but even just in the global markets. Everybody is hotly waiting for the Budget to be unveiled on February 1. There are some expectations that we are going to see a little bit of some subsidy or tax cuts for the working class individuals who were hit hard by the recent demonetisation programme. So, we will have to see what some of the details are as far as what it is that Prime Minister Modi is going to do to try to rekindle some of the economic enthusiasm that may have been dampened a little bit as a result of demonetisation.
On Budget : if they do not have an eye on the near-term to prop up consumption and do transfers to the poor and keep another eye on the long-term to make those long-term investments, this Budget might be viewed as a failure of it does not accomplish all of those goals.
On fiscal deficit target: A 3.5 % fiscal deficit is not the greatest thing, but it is also not the end of the world when it comes to Budget deficits across the global economies here. So, if he has to back away from that a little bit, investors might give him a pass.
We are seeing early indicators at least from US investors when you look at the flow of money going into whether it is developed markets or emerging markets that people are developing more of an appetite for emerging market equities.
What would you bet on in India? The two specific sectors that I really like in India would be the industrials and healthcare and for somewhat different reasons. Like industrials, mainly because I think Prime Minister Modi is going to continue on with infrastructure development and trying to improve productivity growth in India. Now, healthcare is another area that I like because healthcare is going to require further investment with public health expenditures in India, so sort of domestic led, people are demanding better service from hospitals and from pharmaceutical companies, biotechnology and the such.