We are overweight on India given the number of factors in its favour. It is one of the best among the emerging markets with its impressive earnings growth, cushion of lower oil prices and the promise of structural reforms en route PM Modi’s full term. At the same time, high valuations, vulnerability to bad news and risk of a sharp oil price rebound are cons one can’t overlook. If India fails to achieve an annual growth rate above 7.5%, the prospects could be rather bleak for investors.
The authors is Geoffrey Dennis, Head –Global Emerging Market Strategy, UBS Investment Bank.