Now Nomura backs BJP after Goldman, CLSA : The Modi Effect

In what is seen as another major boost for Guajarat CM Narendra Modi, Japanese brokerage Nomura Holdings has put its weight behind the BJP strongman stating it expected BJP to form the next government…

the modi effectYet another foreign brokerage has said that it expects Narendra Modi-led BJP to come to power after the Lok Sabha elections. “Nomura expects a BJP-led coalition to form the next government at the Centre after the 2014 elections,” Alastair Newton, political analyst at the Japanese brokerage, said in a note dated 26 November. However, Newton tempered his political forecast saying “a stable government, regardless of whether it is led by the BJP or the Congress, should support a gradual business cycle recovery”. “Once political stability has been established, we believe past investment projects cleared by the Cabinet Committee of Investment could be implemented,” Nomura India chief economist Sonal Verma said.
Verma said political stability and policy credibility are paramount to corporates making long-term investment decisions. This will help the economy witness a gradual recovery after the third quarter of 2014, she said. Verma also said a Third Front government or a fractured mandate in the hustings will further slow the reform momentum and lower potential growth. Recently, Wall Street giant Goldman Sachs had raised its investment stance on India to ‘marketweight’. Goldman had said that the recent market rally was driven by the ‘Modi effect’ and had raised Nifty target to 6900 for 2014-end. The Goldman statement attracted scathing criticism from a number of senior Union Ministers who asked them to stick to what they are good and keep off from meddling in the political matters of the country.
Christopher Wood of the Hong Kong-based brokerage CLSA too has repeatedly batted for Modi in his column ‘Greed and Fear’. “There is no doubt that what could be termed a Modi momentum is building in India… It is also clear that perceptions of Narendra Modi’s prospects for the general election are rising by the day,” Wood had written in his column recently.


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