Impact of Unfortunate Quake in Japan to Indian Companies

The unfortunate natural disaster that occurred in Japan over the last few days will have limited impact on Indian Companies and Equities. India’s exports to Japan (2.1% of total) – primarily metals/ores, and imports (2.3% of total).

The possible indirect impacts – on India’s nuclear energy policy going ahead, the reaction of Japanese businesses regarding India operations and investments and Japanese capital flows into India (equity and debt), could have greater bearing over time.

India with acute power shortage wanted to address it by establishing Nuclear Fuel based power plants. However, with conservative mindsets across the spectrum of Government, this project will now invite wider debate and decision making will be lot slower. L&T and BGR Energy are likely to be adversely affected.

Japan is the sixth largest foreing investor in India with $22 Bn investments in the past 10 years with significant 100% owned interests (Auto’s, Consumer electronics), meaningful acquisitions/JV’s/strategic investments. In the short term this will come to a halt as Japan will rebuild its Home but long term interests are likely to remain intact.

In a separate note, Morgan Stanley has downgraded India. Do follow our headline updates.