A comeback year for equities: Rashesh Shah

India is entering 2014 from a fairly good place. Our currency has stabilised a lot. Gold imports have come down and so has the current-account deficit (CAD), the latter story unlike a lot of other emerging markets. Overall, except for inflation, on most of the other counts, there's a sense of optimism. Some of the projects which are stuck are being revived. We should come back to 5.5 per cent growth in the coming year.

Elections are a key event the next year but whichever government comes to power, there's talk about reviving growth, speeding projects and raising capital expenditure. There's a shift on getting the economy going again by all parties. The only negative surprise could come from a fractured mandate. India is now a highly under-invested market. Corporate India has done very well. Capital allocation into companies is going very well and companies are efficiently managing capital. Equities will come back in 2014 after five years. We are seeing this transition from bonds and commodities into equities happen globally.

On the interest rate front, there's going to be uncertainty in at least the first half, and we will have to watch inflation very closely. The RBI governor did the right thing by waiting to see the inflation data recently before raising rates; we are hoping that at least inflation should not go up. The global economy will do well, so information technology and pharma will do well. The other reviving sector is manufacturing; automobile ancilliaries will do well. In the latter half, with interest rates coming off, banking will reverse and start to do really well.

Rashesh Shah, Chairman, Edelweiss