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"It’s hard to overstate the benefits of lower real interest rates to the economy and the equity market. For example, mortgage lenders will see greater loan demand as the cost of mortgages converges towards the already lowered expectation for home price inflation. Mortgage loans as a percentage of GDP stand below 10%, and lower real rates should help to accelerate their penetration. Credit quality for mortgage lenders should also improve in this environment. Toll road operators will gain from the enhanced feasibility of new projects and faster traffic growth for existing projects due to a rebound in industrial activity. Toll tariff hikes have already moderated as a result of falling wholesale inflation; it’s only a matter of time before project financing costs decline commensurately.Another beneficiary will be the auto sector, which should see a return of the price-sensitive first-time buyers as lower real rates improve their purchasing power. Generally speaking, we believe that high quality businesses in the financial services, industrial, and consumer durable sectors will be the biggest winners in the months and years ahead.So despite the prospect of a US rate hike and the Chinese market turmoil—both of which are typically negative for emerging-market equities investment—we believe Indian equities are poised to regain momentum. By looking beyond this year’s controversies, investors can find attractive opportunities in select stocks, particularly in industries that are likely to benefit from lower real interest rates."
"It’s hard to overstate the benefits of lower real interest rates to the economy and the equity market. For example, mortgage lenders will see greater loan demand as the cost of mortgages converges towards the already lowered expectation for home price inflation. Mortgage loans as a percentage of GDP stand below 10%, and lower real rates should help to accelerate their penetration. Credit quality for mortgage lenders should also improve in this environment. Toll road operators will gain from the enhanced feasibility of new projects and faster traffic growth for existing projects due to a rebound in industrial activity. Toll tariff hikes have already moderated as a result of falling wholesale inflation; it’s only a matter of time before project financing costs decline commensurately.Another beneficiary will be the auto sector, which should see a return of the price-sensitive first-time buyers as lower real rates improve their purchasing power. Generally speaking, we believe that high quality businesses in the financial services, industrial, and consumer durable sectors will be the biggest winners in the months and years ahead.So despite the prospect of a US rate hike and the Chinese market turmoil—both of which are typically negative for emerging-market equities investment—we believe Indian equities are poised to regain momentum. By looking beyond this year’s controversies, investors can find attractive opportunities in select stocks, particularly in industries that are likely to benefit from lower real interest rates."
[text] Why Indian Equities are Poised to Go Higher Even With Turmoil in China and Rate Hikes in the US | AB
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