Indian mkts on high growth track for next 5-7 years, says RBS

Indian markets are likely to repeat the earlier highgrowth period of 2003-2008 over the next 5-7 years, on the back of an expected reforms push by the Narendra Modi-led government, RBS Private Banking said in a report, maintaining an “overweight” stance on equities.

“The new government has put $15 billion (`89,595 crore) worth of investment decisions on fast track in addition to the $100 billion (`5.97 lakh crore) already cleared by the previous government. We expect to see a pick-up in investment-led growth in the coming months,” the bank said in its mid-year investment outlook released on Friday.

The stock markets have been on a bull-run over the last few months. The benchmark BSE Sensex closed up 0.5% at a record 25,962.06 on Friday, while the NSE Nifty gained 0.5% to end at a record 7,751.60.

“We expect momentum to remain positive to the end of 2014, and for the Nifty to move up to 8,650,” RBS said.

A stable political environment, credible monetary authority and potential fiscal reforms make a strong case for foreign investments in India, it added.

Finance minister Ar un Jaitley is expected to announce a slew of measures to boost the economy and revive the investment climate in the budget to be presented on July 10.

Net investment of FIIs in Indian equities has already passed $10 billion (`59,720 crore), according to Securities and Exchange Board of India data.

“Future FII flows will likely sur pass those of previous years,” the report said.