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See 15-16% earnings growth in 2 yrs; overweight India: UBS

Geoff Dennis of UBS says valuations in India should be high as he expects earnings growth to be 15-16% in dollar terms in two years. He says earnings growth continues to remain a challenge for many EMs, further justifying the high valuations in India.

As a global investor, Geoff Dennis of UBS will be focusing on fiscal deficit and whether it can be reigned within 3.5-4 percent of GDP, structural reforms once again focusing on the fiscal side and significant increases in infrastructure spending.

“What’s important is the trajectory of fiscal deficit and whether it is coming down… As long as it is lower than 4 percent of GDP, the market will not be too worried,” he told CNBC-TV18.

Despite high valuations, Dennis remains overweight on India. He believes valuations should be high as he expects earnings growth to be 15-16 percent in dollar terms in two years. He says earnings growth continues to remain a challenge for many emerging markets, further justifying the high valuations in India.

He expects the Reserve Bank to lower rates by 100 basis points this year. According to him, economic growth and interest rates cut will ensure that the balance sheet of banks doesn’t decline. He is bullish on select public sector banks, IT sector and a few industrial sector names as well.

Stay tuned for more…

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