NRI advisers in the UAE are upbeat about the prospects of Indian securities and property markets after the general election, advising investors to cash in on the euphoria in the short term.
Indian markets hit all-time highs last week on Prime Minister Narendra Modi’s return to power with a stronger mandate.
The benchmark Sensex index crossed the psychologically important 40,000-mark for the first time ever in six sessions, though there was a retreat later.
Market participants see the initial rally as just a beginning with the prospect of an unprecedented and sustained bull run.
“The present temporary dip after the big rally is the right time to enter the market, either directly or through mutual funds,” said Krishnan NV, director, The Institute of Chartered Accountants of India, Abu Dhabi Chapter.
He also warned that there will be some correction before another big rally: “The market is upbeat and a good opportunity to cash in on the current positive sentiment. The promising sectors are power, infrastructure, and agriculture-related industries with the new government has promised to give a bigger push to the rural sector.”
Some investment advisers are busy redrawing client portfolios to derive maximum benefit from the current sentiment before it fizzles out in the short term. “However, in the long run, a definite bull run is in the horizon and investors should now move decisively and take informed decisions,” said Sajith Kumar PK, chief executive officer of Dubai-based advisory services firm IBMC International.
Gain in property market too
The gain is not confined to the stock markets alone. Along with the securities the realty sector offers sound investment opportunities. As it is, the Indian property market has been undergoing a revival with transaction volumes picking up as high as 45-60% in major Indian cities. A stronger government will further instill confidence in the sector and NRI investors are definite to flock to the sector.
The stable government is expected to give a boost to the economy and facilitate more foreign funds inflows in the country, as evidenced by the historic rise to 40,124 points on the benchmark index Sensex on the news of the Modi government’s return to power. It is believed that the government will take stronger measures to reform the economy and aid growth.
The government has pledged to spend over $1.4trn (£1.10trn, €1.25trn) to develop infrastructure and double the exports. Such proactive plans in conjunction with tax benefits to the middle class can boost the economy and reverse the recent slowdown in consumer spending. A healthy economic outlook will also revitalise the real estate industry and result in heightened demands.
The Indian real estate sector is witnessing a gradual resurgence after the implementation of key policy reforms such as the unified tax regime under GST.
The sector has witnessed increased participation by NRIs to take advantage of the depreciating rupee and some favourable changes in investment regulations.
Now that the rupee is seen to strengthen in the near future due to increased foreign funds inflow, there will be a slowdown in fund flows to the sector from overseas buyers.
This trend will reverse once the Indian currency’s value is depreciated. It is expected that the rupee could touch 20 against the UAE dirham (INR73 for $1) by the year-end.
