Jonathan Schiessl, CIO and manager of the Ashburton India Equity Opportunities Fund said he expected the economy to be back to normal by Q2 this year and backed Botham’s assertion for cuts to follow.
He said: “There is no doubt the demonetisation has had a short-term negative impact on economic activity and growth, but we are still waiting for data showing the scale of the slowdown. We are currently fairly confident the worst is behind us and expect the economy to be back to normal through the second quarter of the year.
“We remain extremely positive on the outlook for India, but whether markets can rally in the short term will depend on the elections and the shape of the reform process. We may also have to contend with volatility surrounding potential policies from new US President Donald Trump,” he added.
A cut in interest rates could also encourage a reappraisal of India’s credit rating, something Schiessl says is ‘long overdue’. “A credit upgrade would further enhance India’s attractiveness as an investment destination,” he said.
