The recapitalisation of state-owned banks with the capital reserves of Reserve Bank of India (RBI) will charge up the Nifty by several hundred points and will enable growth, says Ridham Desai, managing director, Morgan Stanley India.
In an interview to CNBC-TV18, Desai said the market needs policy action and fresh triggers as election results have been digested by it, “For the market to make any durable move, it needs to see what the government is prepared to do in terms of policy response.”
"I think the budget is a limited platform as these days policy reforms go way beyond budget. Technically, the budget is only a statement of the government's revenues and expenditures. So, let us focus more on what policy initiatives the government needs to take in or outside the budget that doesn't matter," he said.
Talking on country's exports, which is stagnant, Desai said there is a unique opportunity right now for India as the trade war is happening around the world, "There are encouraging signs in this area as Prime Minister Modi himself is travelling to neighbouring countries to improve trade. I don't think Prime Minister is going there to just exchange pleasantries, I think trade deals are being chalked out."
"I am also hoping that there is no slippage on the fiscal side. There is a lot of debate out there that the government should use the fiscal deficit and pump prime, I am not a big fan of that, not at the central level as there is already slippage at the state level. The centre I think needs to continue to maintain its discipline," he added.
According to Desai, there is no much scope for the government to increase revenues as the economy is not doing well, "So, you need to kick-start the economy. I think the government need to focus on that rather than on the social sector for now."
Speaking on fast-moving consumer goods (FMCG) and autos, he said, "There is a fair bit of caution in autos. For FMCG, the caution has persisted for a while because of the valuations, so it is not about growth. I am actually incrementally bullish on both the sectors. I think there is some value in some FMCG stocks and there is certainly value in the auto names. So, I am bullish on both of them, more so on the discretionary than on staples, I think a lot of price damage has happened."Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.