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'Modi'-fying Dr Rajan - Views on News from Equitymaster

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The Equitymaster Research Digest

'Modi'-fying Dr Rajan
Jun 7, 2016

  • High expectations for Rajan and textile stocks
  • Why we gave a 17-bagger a miss
  • Ankit has something very important to share

The Sensex gained 5% in the past fortnight. I could have written that same line exactly two years back. The benchmark index had a similar sprint in the last few days of May 2014 too - a sprint that continued till January 2015 before falling off a cliff.

Neither GDP nor earnings growth fuelled the index then. Nor are they the key hooks for investors today.

If 2014 was the year of hope from Modi, 2016 is the year of hope from Rajan. The reason: Dr Rajan's second term is as important for investors today as was Modi's first term in 2014.

India has had some of the best central bankers in the world for the past two decades. There is hardly any other reason we sidestepped the Asian financial crisis, the dotcom bubble, and the subprime bubble.

But few governors have been as popular as Dr Rajan. The acclaim and support from global experts for the current RBI governor is unlike anything before. And that's why investors want to see his term extended. Rajan, like Modi in 2014, is a sign of Indian prosperity.

Dr Rajan has Modi-like appeal for Indians these days, and newspaper headlines are doing their best to create a similar halo around him. In short, Dr Rajan is being 'Modi'fied.

With an extended term, the RBI governor will be expected to curb inflation, stoke growth, and solve the banks' NPA crisis - all the while averting global crises.

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