Adrian Mowat, emerging equity markets strategist in an interview with CNBC-TV18 shared his views global and Indian markets.
When asked if the global cues could stymie the Indian rally, Mowat said, “I think there is a risk that it does. India has responded well to the election outcome and has significantly outperformed other emerging and global markets. It is fundamentally good to have continuity in the government but there is the risk that you overstayed the benefit.”
"The current government has been in power for the past five years and have put through reforms but we have seen that dealing with undercapitalised PSU and non-bank financials takes a lot of time, So, the optimism seems to be a little too much around the Indian story post-election," Mowat said.
When asked if he would bet on some of the economy facing stocks, Mowat said he was in fact confused by the rally in names like Larsen and Toubro and cement stocks because usually money is spent ahead of elections and not after.
“There wasn’t a political barrier on spending on roads and infrastructure prior to elections, post-election it is typical for governments to run a more stable and prudent fiscal policy, so less stimulus because it does not make sense to pump-prime the economy to make the electorate feel better since they have already voted for you,” he said. "Therefore, we would be taking money out of cement stocks, out of L&T at this point in time."
So broadly, with regards to India, he said they would prefer to take the risk off the table because the market has understandably rallied on what has been a positive political surprise but the market may have rallied a bit too much in relative to other global markets.