Go long on Indian government bonds says CLSA's Christopher Wood

Add to positions on weakness, he suggests in 'Greed & Fear' report

Foreign investors who take investment calls based on macro-economic indicators could reap gains from bets on Indian government bonds. Possible rate cuts by the Reserve Bank of India paves the way for upside according to well-known analyst Christopher Wood, the chief equity strategist at CLSA Asia-Pacific Markets.

In his Greed & Fear report, he said that interest rate cuts could help such positions in the days ahead; even as he advised equity investors to go add companies which would benefit from lower interest rates.

?The longer the RBI stays on hold the more quickly and swiftly interest rates will decline later as India reaps the benefit of the deleveraging cycle it has been in recent years with loan growth having decelerated from 24.5% to 11% since the end of 2010,? said the report dated October 31.

The report added that Indian bond yields look attractive to global players, even as currency worries have receded.

"Macro investors should remain long Indian government bonds and add to positions on weakness while equity investors are advised to tilt their portfolios to beneficiaries of rate cuts," said the report.

It added that India is the most promising stock market story amongst its Asian and emerging market peers (as well as the rest of the world) on a five-year view.