After Goldman and CLSA, Nomura too sees Modi wave

Yet another foreign brokerage has said that it expects Narendra Modi-led BJP to come to power after the Lok Sabha elections.

“Nomura expects a BJP-led coalition to form the nextgovernment at the Centre after the 2014 elections,” politicalanalyst at the Japanese brokerage, Alastair Newton, said in anote dated yesterday.However, Newton tempered his political forecast saying “astable government, regardless of whether it is led by the BJPor the Congress, should support a gradual business cyclerecovery.”

Nomura India chief economist Sonal Verma added, “Oncepolitical stability has been established, we believe pastinvestment projects cleared by the Cabinet Committee ofInvestment could be implemented. This revival will be led by adebottlenecking of existing investment projects.”

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[caption id=“attachment_1253711” align=“alignleft” width=“380”]  Nomura expects a BJP-led coalition to form the next government at the Centre after the 2014 elections," political analyst at the Japanese brokerage, Alastair Newton, said in a note dated yesterday. PTI[/caption]

Nomura is the third multinational brokerage after WallStreet giant Goldman Sachs and CLSA to come out with an open politicalstatement supporting the candidacy of Modi for the toppolitical job in the country.

Goldman had also said that the recent market rally wasdriven by the Modi effect and had pegged the Sensex target forDecember 2013 at 23,000.

The Goldman statement attracted scathing criticismfrom a number of senior Union ministers who asked them tostick to what they are good and keep off from meddling in thepolitical matters of the country.Notwithstanding this, ex-Goldman official Jim O’Neill wasquoted repeating the Modi theme for the market by Economic Times.

Even CLSA’s Christopher Wood has repeatedly batted for Mr Modi in his column ‘Greed and Fear’.

“There is no doubt that what could be termed a Modi momentum is building in India… It is also clear that perceptions of Narendra Modi’s prospects for the general election are rising by the day,” Mr Wood had written in his column recently.

Meanwhile, Verma of Nomura said political stability and policycredibility are paramount to corporates making long-terminvestment decisions. This will help the economy witness agradual recovery after Q3 of 2014.

Verma went on to add that politics is the key downsiderisk domestically, saying a Third Front government or afractured mandate in the hustings will further slow the reformmomentum and lower potential growth.She also said the RBI will hike interest rates by 25 bpstwice in the first half of 2014 citing still high inflationpressures.

Nomura believes economic growth is near its trough butdomestic demand remains very weak due to a lacklustre capexcycle amid political uncertainty, falling income growth andhigher interest rates.

With inputs from PTI