Don't see a cyclical pick-up in India at the moment: CLSA

Foreign brokerage CLSA on Thursday said it does not see a cyclical pick up for the Indian economy at the moment, but adds that the real estate sector is showing signs of a potential uptick.

In an interview to CNBC-TV18's Areeb Sherwani, Adrian Mowat, chief strategist, said he is not surprised that inflation has breached Reserve Bank of India's (RBI) medium-term comfort zone.

Mowat said, "Inflation is another disappointing economic data point from India and manufacturing has definitely been leading the slowdown. So, to some extent, we are not surprised as it has been a part of the ongoing trend. For markets like India and Indonesia, global investors like these economies because of their high underlying trend rate of growth."

"You have to see if there is a delta in India that makes this market look more attractive and it is going to encourage more funds to come in. The government has to focus on the NBFC sector, where there is a credit crunch going on. So, the RBI is cutting interest rates but the plumbing is blocked. So, you cannot say they have cut interest rates, we are going to get a monetary stimulus unless the plumbing is cleared and the money gets through and that is not going on," he added.

On real estate sector, he said, "Real estate has had quite a troubled period. We have had new regulations around the real estate which are structurally actually quite good and help the potential home buyers."