Why Daiwa Capital’s Kitney Is Overweight India

Paul Kitney discusses India's economic outlook, highlighting its superior growth profile compared to the region, with a projected earnings growth of 20%. Despite a valuation premium, India benefits from significant monetary policy flexibility, allowing for potential rate cuts without undermining the currency. The correction in oil prices positively impacts India's current account. However, risks such as geopolitical tensions in Kashmir and issues with non-bank financial corporations remain. The Reserve Bank of India (RBI) can continue rate cuts, but the effects on the economy are yet to be fully realized. Macroprudential rules are being strengthened to ensure financial stability.

What is the expected earnings growth for India compared to the rest of the region?

• 10% for India, 5% for the region

• 20% for India, 3% for the region

• 15% for India, 10% for the region

• 5% for India, 20% for the region

What monetary policy tool is India expected to adjust?

• Repo rate

• Reverse repo rate

• Cash reserve ratio

• Statutory liquidity ratio

How does the correction in oil prices benefit India?

• India is a major oil exporter

• India's oil consumption decreases

• India's oil production increases

• India is a major oil importer

What geopolitical issue is mentioned as a risk factor for India?

• Nuclear tensions with Pakistan

• Trade war with the USA

• Geopolitical tensions in Kashmir

• Border disputes with China

What impact did the recent elections have on India's economy?

• Led to a rise in inflation

• Increased foreign investment

• Boosted industrial production

• Caused a pause in consumption patterns