Goldman Sachs, amongst the top investment banks in the world, upgraded India’s rating to marketweight from underweight on the perception that BJP-led NDA “could prevail” in the 2014 elections. This was highlighted in its 18-page report, ‘Modi-fying our View: Raise India to Marketweight’.
It said that equity investors tend to view BJP as business-friendly, and its PM candidate Narendra Modi as an agent of change. Stock markets in India have been hovering around 21k mark despite poor fundamentals (currency depreciation, bloating subsidies, pressure of rating downgrade etc.) and some view that this is on account of opinion polls showing NDA victory. Gujarat has done really well in terms of industrialization; some of the larger business groups in India (Ambanis, Ruias, Adanis etc.) have their factories in Gujarat. The state was also able to enable Tata Motors shift its NaNo plant from West Bengal after significant land acquisition protests there very smoothly.
Markets may move to 24k levels according to pundits if NaMo becomes PM. So Goldman actually pointed to the situation on the ground, at least among the broker / business community. This statement assumes significance and shows that international financial community has no faith left in this rudderless govt.
This totally infuriated the ruling Congress already reeling under corruption scams, losing popularity and staring at possible loss in next elections. Commerce Minister Anand Sharma hit out at Goldman and accused it of ‘messing around with India’s domestic politics’. He ridiculed Goldman’s ignorance about the basic facts about the Indian economy. Mr. Commerce Minister what do you mean, Indian economy is in shambles! So you are not happy with the upgrade and wanted India to remain at underweight level? Or you are angry that the upliftment of rating was not attributed to Gandhi family.
Even rating agency S&P has warned of a downgrade post the 2014 elections “if a government which cannot push through reforms comes to power” in a veiled reference to UPA-III or a Third Front govt. emerging. Get your act together and do some reforms to win back the trust of the international investors. Don’t just target each and everything which favours Modi. You by this way doing him immense good.
Following on the heels of Goldman, another leading foreign brokerage CLSA has attributed the recent rally in stocks and the rupee to expectations that Modi would emerge successful in the 2014 Lok Sabha elections. It said that Modi is reportedly drawing six-eight times the crowds Rahul Gandhi of the Congress. So eager are crowds to see the charismatic Modi that they have even been paying to see him speak. Normally, in developing countries, mobs are paid to attend such rallies. Well put CLSA.
Now who will bark CLSA down? Sharma or the notorious Manish Tewari, who most of the time doesn’t know what he is saying. It is a pity that despite the fact that the current PM is a noted economist, Indian economy is facing its worst crisis ever in recent times.