After Goldman, Nomura sees Modi wave in 2014

Mumbai: Yet another foreign brokerage has said that it expects Narendra Modi-led BJP to come to power after the Lok Sabha elections. "Nomura expects a BJP-led coalition to form the next government at the Centre after the 2014 elections," political analyst at the Japanese brokerage, Alastair Newton, said in a note dated on Wednesday.

However, Newton tempered his political forecast saying "a stable government, regardless of whether it is led by the BJP or the Congress, should support a gradual business cycle recovery."

Nomura India chief economist Sonal Verma added, "Once political stability has been established, we believe past investment projects cleared by the Cabinet Committee of Investment could be implemented.

This revival will be led by a debottlenecking of existing investment projects."

Nomura is the second multinational brokerage to come out with an open political statement supporting the candidacy of Modi for the top job.

Nomura is the second multinational brokerage after Wall Street giant Goldman Sachs to come out with an open political statement supporting the candidacy of Modi for the top political job in the country. Goldman had also said that the recent market rally was driven by the Modi effect and had pegged the Sensex target for December 2013 at 23,000.

The Goldman statement attracted scathing criticism from a number of senior Union ministers who asked them to stick to what they are good and keep off from meddling in the political matters of the country.

Notwithstanding this, ex-Goldman official Jim O'Neill was quoted repeating the Modi theme for the market by a business channel. Verma of Nomura said political stability and policy credibility are paramount to corporates making long-term investment decisions. This will help the economy witness a gradual recovery after Q3 of 2014.

"We expect GDP to accelerate to 5.7 per cent in 2015 from 4.8 per cent in 2014. Our growth recovery forecast is more gradual than the country's past cycles due to the leveraged balance sheets of corporates, higher bad loans and higher interest rates," Verma said.