Dr. Swamy shared his views on what to expect for India’s equity market in the months to come, in this chat with performanceGurus
1. After Modi’s visit to the US, you had mentioned that promises have to be followed up with action on the ground and to a certain extent Shri. Modi has delivered (combining Persons of Indian Origin(PIO)/ Overseas Citizen of India(OCI) card, Visa on arrival etc.) but it remains to be seen as to when the infrastructure plans will bear fruit, e. g. 24/ 7 Electricity supply, Single Window clearance for projects etc.
First of all, Modi came to power due to three factors:
1. Good Governance
2. Ram Temple and
3. Removal of Corruption, for which I played a significant part in unraveling the 2G Spectrum scam.
Today India ranks 93 in Forbes Best Countries for Business list and Modi wants India to jump up 50 places every year so India will be at the top in about 2 years. There are other challenges that need to be addressed, such as punishing the guilty in various scams and sending them to jail so the message is sent loud and clear that the law of the land is the same for all. Several steps are being taken to ensure that Good Governance will be in place, such as opening Bank accounts for everyone etc. Modi will not hesitate to weed out the inefficient ministers in his Cabinet and replace them with capable/ decisive leaders, who can take the long term gain for short term pain.
2. Investing in Indian equities is a bit of a lottery now because RBI stipulates a short list of stocks into which the investor can put money in. This list gets updated on a daily basis and if NRIs(Non-Resident Indians) cross the line, they are heavily penalized.
In about 18 months, expect RBI to ease these restrictions and make it easy for anyone to invest in India. Once Power and infrastructure is in place, India will be a great place to do business.
3. How do you see the Stock market playing out? Are Participatory Notes going to be banned so stocks can find their true value?
Participatory Notes(PNs) should be banned as this is a financial instrument created as a loop hole to convert Black money into White. I am hopeful that it will be done soon. Yes, the Stock Market will correct if this happens but it is a one time occurrence and I am hopeful that it will recover quickly once the investors gain confidence that the distortion of prices due to PNs is no longer priced in.