 "Elections won't kickstart investments: report")
A change in government may not necessarily result in a change in the pace of investments.
The majority of projects stuck now are with the state rather than the central government and even the ones that are stuck, may not take off due to overcapacity issues, according to a Credit Suisse Securities India Equity Strategy report dated 19th March.
"Only a fourth of projects are stuck with the central government, and two-thirds of these are in power and steel, both wracked with massive overcapacity; thermal power utilisation is at two-decade lows," it said.
It is the state government rather than the centre which will need to take action on some infrastructure segments like power, while others may not take off for a while.
"Only state governments can revive power demand. Even elsewhere (roads, railways, etc.), solutions will take years," said the report authored by Research Analysts Neelkanth Mishra and Ravi Shankar.
The report noted that the utilisation of thermal power generation is at a twenty year low, having slipped below 60 per cent on account of issues plaguing State Electricity Boards and availability of coal.
National Highways projects could be held up by legal issues while any improvement in rail infrastructure will require additional capital which is currently lacking, said the report.
Meanwhile the market is likely to turn to defensives and bottom up stock picking after the results.
"Irrespective of which of the Scenarios plays out, the markets are likely to discover that the path of the economy hasn't changed (see the discussions in the first two sections of this report), and earnings trajectories of various sectors are unchanged. In this phase, "defensive" sectors like IT, healthcare and staples, and more bottom-up stories like in energy or consumer discretionary are likely to outperform, in our view," said the report.
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