After Goldman Sachs, now Nomura sees Narendra Modi wave

New Delhi, 28 November 2013

Yet 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,” political analyst at the Japanese brokerage, Alastair Newton, said in a note dated yesterday.

Nomura is the second multinational brokerage after Wall Street giant Goldman Sachs to come out with an open political statement supporting the candidacy of Modi for the top political job in the country.

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 a gradual business cycle recovery.”

Nomura India chief economist Sonal Verma added, “Once political stability has been established, we believe past investment projects cleared by the Cabinet Committee of Investment could be implemented. This revival will be led by a debottlenecking of existing investment projects.”

Verma of Nomura 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 Q3 of 2014.

“We expect GDP to accelerate to 5.7 per cent in 2015 from 4.8 per cent in 2014. Our growth recovery forecast is more gradual than the country’s past cycles due to the leveraged balance sheets of corporates, higher bad loans and higher interest rates,” Verma said.