I see these results as positive in the medium term as continuity of the current government is important to maintain the pace of fiscal and financial reforms, focus on infrastructure development and better implementation of large scale public benefit schemes. The areas where the government needs to improve is revival of the manufacturing sector, reform of the public sector banks and job creation. There have been various data points leading to rising unemployment in India and the current slowdown in the consumer, auto and real estate sector does reflect the pressure on disposable income and this is something which we need to monitor from here. On markets, I think markets were already expecting a majority for the current government after the exit polls last week and hence I don’t expect them to move up sharply in short term. On the other side there are short term negatives in terms of NBFC and real estate stress and consumer spending slowdown, which will put pressure on corporate earnings and we need to wait for earnings recovery to see meaningful upside in markets from here. I would remain selective on stocks and generally cautious on markets in short term but remain constructive on India in medium to long term given the growth potential, demographic profile and strong business models run by very competent management teams.
Amit Goel, Porfolio Manager of the Fidelity Funds India Focus Fund
