In its mid-year investment outlook released in July, RBS Private Banking has expressed optimism for Indian equities despite high volatility, rising global crude prices and weak corporate earnings. Rajesh Cheruvu, chief investment officer with RBS Private Banking in India, expects an improvement in earnings momentum and the credit cycle to assist economic recovery in the second half of the year.
“The Greece bailout concerns appear to be behind us. However, a US Fed rate hike and budget negotiations between the White House and the Congress could lead to some amount of volatility in global asset markets in the coming months,” he says. However, Cheruvu is quick to add that the volatility would offer buying opportunities in India given its economic reforms and easier monetary conditions.
The bank also said that given the uncertainty over the progress of the monsoon, 2015 may see one more rate cut of 25 basis points from the RBI. “More than a rate cut, measures around releasing bank capital from stressed asset provisions could be seen as a positive measure. This will kickstart the credit cycle and improve the scope for transmission of future policy rate cuts,” says Cheruvu.
RBS also remains bullish about European equities. “European equities are one of our strongest and best performing convictions since December 2014 and we see potential for further gains,” the report says.
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(This story appears in the 21 August, 2015 issue of Forbes India. To visit our Archives, click here.)