The long-term positive macro story is still largely intact

● We met with a number of technocrats in place in key ministries who seem

well in command of their brief. We heard no complacency as yet on the need

for reforms.

● Quiet progress on longer-term structural reforms in some areas (National

Infra Fund, reducing energy subsidies, direct transfer of subsidies).

● Significant progress on increasing coal production and dealing with

transport/environment clearance bottlenecks.

● Recognition that the MAT was an 'own goal' and committed to defusing the

problem.

● Feeling that corruption levels are diminishing and ease of doing business is

improving.

● Strong conviction that some big-ticket reforms will in fact occur, especially

GST, where we heard widespread agreement that if passed, this would have

significant positive impact.

● Near-term progress has been slower than expected

● Passing reform legislation through Parliament is proving an obstacle (the

opposition is focusing on polarizing issues like land reform, and retain control

of the Upper House)

● Lack of progress in addressing balance sheet problems for PSU banks and

corporates, limiting appetite for private investments

● General sense that onshore monetary conditions are tight and, in our view,

over-optimism about near term RBI easing

● Rural incomes/spending under stress due to weak commodity prices and

lower government spending, with no obvious near term relief

David Fuller's view

Here are the Goldman notes:

These and the other points mentioned sound reasonable to me.  India (weekly & daily) from the time Narendra Modi threw his hat into the electoral ring in September 2013, before peaking at 30000 in early March of this year.  I have maintained that it would experience a well deserved consolidation before eventually moving higher. 

Narendra Modi is not a magician.  Instead, he is a superb leader with a Herculean task.  Meanwhile, stock markets are candidates in a global beauty contest.  Therefore, when a high flying market loses momentum, actively managed money will move away. 

I think India is near an entry point for interested investors and agree with Goldman Sachs assessment of the longer-term outlook.