UBS South Asian Focus

UBS South Asian Focus -

India: Slowdown Ahead=Sell Banks, Real Estate, Consumer Discretionary Sectors=In this note we downgrade our India economic growth forecast to 7.1% in FY09 and to 7.2% in FY10 . The economic expansion continues, but at slower pace due to more significant imbalances which make the 'v' shape resumption to 9%+ growth extremely hard to achieve. There are three factors to watch: a wider current account deficit, a heavier fiscal burden and increased risk of the next government having to deregulate domestic fuel prices. While the Indian investment story still has much to offer investors, the climate has changed. The average rate of inflation (and therefore interest rates) will remain higher and there is increasing risk that the (new) government would have to deregulate pric