After Raamdeo Agrawal’s clarion call to investors that this is a “Once In A Lifetime Opportunity To Buy Stocks”, Motilal Oswal Securities has issued an “India strategy report” in which it has given a logical and sensible explanation on why the time is opportune to buy stocks.
The report claims that there are 4 key factors why it makes sense to invest in equities now!
1. India to see a majority government after three decades: India has decisively voted BJP-led NDA to power at the center. Looking at the enormity of the mandate given to BJP and its allies, it does not look like a mandate only to improve governance and bring development, but a mandate to reset the India story for a new direction. An absolute majority has given the party a clean slate to re-write the India story for the first time in 30 years.
2. Change in management does matter: It is a well known fact that changes in senior leadership of company management brings about change in goals, direction of the company – positive or negative. This has been evident in India Inc which has witnessed senior management changes in past decade (like TCS, Axis Bank, Indusind Bank, etc), which was followed by strong returns and significant outperformance by the company. Similarly, we believe a change in the Indian government, which under UPA regime was marked by poor governance, wide-spread corruption and policy paralysis bodes well for the market. Narendra Modi has won the mandate on back of his performance as Chief Minister of Gujarat.
3. Economy: Good days ahead: Developmental focus of the new government can help growth revive from 4.6% in FY14 to 5.5% in FY15 and further to 6.5%+ during FY16 and FY17.
4. Evaluating the ‘Market Troika’!: Markets returns are a function of three pillars Earnings, valuations and flows. And currently all of these seem attractive
The combination of the above factors lead us to believe that it is a good time to invest in Indian equities, the report states.
The report also has an interesting section on the stocks and sectors that investors should buy now.