Don't expect nominal GDP to remain this low in India, says Chris Wood of Jefferies

Labour and land reforms are more important for foreign direct investment than tax rates and fall in the nominal gross domestic product (GDP) is a huge opportunity, says Christopher Wood, global head of equity strategy at Jefferies.

Wood was sharing his views and outlook on markets with Ramesh Damani, Member at BSE, Navneet Munot, CIO of SBI MF and Manish Chokhani, director of Enam Holdings.

When asked if the fall in nominal GDP makes one a diffident investor in India, Wood replied, “On the short-term basis, it definitely makes you a diffident investor in India but on a five-year view, I would view it as a huge opportunity because I don’t think the nominal growth is going to remain this low.”

“I think the markets will be quite happy for Donald Trump to be re-elected because Trump is basically pro-growth. I think for now the markets are not too focused on that because we don’t know who Trump’s presidential candidate is,” he added.

Talking about corporate tax, he pointed out that the issue is to admit that the fiscal deficit this year is going to be much bigger than what the target is.

“On the corporate tax cut, personally I applaud it but from a political stand, it would have made more sense to say we are going to cut the corporate tax in the next fiscal year because that would have had just as good a market impact than cutting this year because markets look forward. But doing it this year causes problems for this fiscal. You just need to say you are doing it for next year and it will have a positive impact,” Wood said.

According to him, the government should manage the divestment programme properly and carefully than rush it. "It seems the March deadline is extremely short. These things take time,” he noted.