Caesar Maasry, strategist at Goldman Sachs, is of the view that the stock market won't focus too much on India's fiscal deficit as it is a long-term concern and not something that requires immediate attention.
“In general, fiscal deficits are becoming an increasing problem. When you get late cycle and debt dynamics looks unsustainable across the globe, I think this is a problem. In India’s case, it’s little less so because India is not the only one with decent size fiscal deficit but also second derivatives matter here and if we actually look at India’s fiscal, at least the central government level, we are running something like 6 percent fiscal deficit several years ago and that improved somewhat with the acceleration in growth. So I still think the second derivative has been largely positive for India and I do not think the fiscal deficit, while it is a long-term concern, is really what the market will be focused on in the next few months,” he told CNBC-TV18 on Thursday.
According to Maasry, entry point in Indian market looks too stretched. “I do not think there are clear signs of deterioration in the fundamental outlook for India but keep in mind that we are trading about 18 times forward earnings in Indian equities,”
With regards to the Reserve Bank of India's policy stance, he said, "RBI can be dovish in the short-term", adding that the near-term dovishness will not be an issue.
"Global environment allows RBI to be dovish," Maasry added.