While the recent Union Budget has created optimism in the Indian equity markets global financial major HSBC on Monday. India as it believes that the weak business sentiment overcapacity and stressed assets would be a major drag on equities going forward according to it the transmission of monetary policy has failed to yield the desired results.
“Weak business sentiment overcapacity stressed assets in the banking system and the slow pace of implementation of government infrastructure projects are just a few of the causes of weak credit demand,” analysis at HSBC said in their report. “We remain cautious on India. Its budget has created some optimism. Fiscal consolidation has been applauded althou-eved it is likely to be achieved through telecom spectrum sale and selling government stakes in companies. Missing these targets could limit the government’s ability to spend unless it steers away from its fiscal consolidation targets,” HSBC reports.
