Indian stock market bears up against monsoon rains, tax plan

Bloomberg

Seasonal rain and a simpler tax system are going to give another push to India’s stock market, the best this year among the 10 largest. So says Baroda Pioneer Asset Management Co., countering the bearish view that stocks in India have become too expensive too fast. Further gains, the money manager says, are underpinned by a growing economy and smaller fiscal deficits coupled with a monsoon that will revive rural areas and a nationwide goods and services tax that promises to make it easier to do business across India’s 29 states. “Indian markets on a relative basis do not look expensive,” Baroda Pioneer Chief Investment Officer Sanjay Chawla said in an email. “Underlying economic health of the country is good.”
State-owned banks cleaning up bad debt and beaten up health-care stocks are attractive, said Chawla, whose firm manages 106 billion rupees ($1.6 billion). The company is a joint venture between Bank of Baroda and Pioneer Global Asset Management SpA, which invests $244 billion globally. Its Baroda Pioneer Large Cap Fund has returned about 27 percent in the past year, beating 82 percent of its peers, data compiled by Bloomberg show.
The benchmark S&P BSE Sensex has set multiple records this year, surging 17 percent, as both foreign and local investors bet that an election victory in India’s largest state would allow Prime Minister Narendra Modi to push through his pro-business agenda.

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