Modi’s BJP Set For Sixth Consecutive Win In Gujarat, Congress Leadership Unconvincing: CLSA’s Chris Wood
Under the leadership of Prime Minister Narendra Modi, the ruling Bharatiya Janata Party (BJP) is set for a sixth consecutive win in the upcoming assembly election in Gujarat, although the majority it enjoys is likely to decline, CLAS managing director Christopher Wood has said in his weekly newsletter, Greed & Fear report.
“Fighting the campaign on the national issues such as Goods and Services Tax (GST) and demonetisation” will prove to be a strategic blunder for the Congress, the top equity strategist noted in his report, saying Modi remains popular in the country despite the short-term disruption caused by GST and demonetisation.
In so doing it is campaigning against Modi and his policies at the national level. The strategy seems to be based on the calculation that both demonetisation and GST have caused problems for small businessmen and traders, the traditional supporters of the BJP. Still Modi remains extremely popular.CLSA’s Greed and Fear Report
“GREED & fear suspects Gujaratis are probably proud of the fact that their former chief minister is now prime minister," he has said, adding the Congress remains under the “still unconvincing leadership of Rahul Gandhi”.
Wood expects Modi to focus on generating jobs ahead of the April-May 2019 general election, although he questions the extent of the lack of employment generation given the inadequacy of employment data.
If Modi remains well positioned, the rest of his first term in office is likely to be focused on generating jobs ahead of the April-May 2019 general election. This is one area where there has been a lack of progress; though the extent of the lack of employment generation is questionable given the inadequacy of employment data.CLSA’s Greed and Fear Report
Wood identifies housing, road building and textiles as the three main sectors where Modi hopes to generate job growth in the next 18 months. The implementation of affordable housing policy will be "by far the most important" driver of job growth, but the impact of this programme will not be immediate, the report notes.
The pick up on the ground in affordable housing may not become really visible until late 2018. But the ramp up is definitely coming which is also why investors should look to buy any pull back in stocks geared to affordable housing. Affordable housing in India remains one of the most straightforward bull stories in Asian equites.CLSA’s Greed and Fear Report
The report predicts more rate cuts in India next year, saying the 10-year government bond has now become an interesting investment again after its recent sell-off.