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Monsoon blues threaten India’s growth story

business Updated: Jul 24, 2009 20:38 IST
HT Correspondent
HT Correspondent
Hindustan Times
Monsoon blues threaten India’s growth story

Though government measures, investor sentiments and liquidity positions have kept the bull on the move in Indian markets; investors and experts feel that negative growth surprise from the West and inadequate monsoon could pose a serious threat.

“Though negative surprises from the Western world are yet to come, we may not have seen the worse in the US and Europe yet,” said Arun Kejriwal of Kejriwal Research & Investment Services Ltd. “Now that it rained in Mumbai, everybody seems to have forgotten about deficient monsoon and steps that need to be taken,” said Kejriwal.

He said the present monsoon scenario is more of a concern than other factors.

With a supportive government at the Centre, it is unlikely that 2009-10 growth rate would fall below the psychologically important 6 per cent, but in a fully and fairly valued market, moderate corporate earnings could dampen sentiments. When coupled with weaker global economic growth and not so good monsoon, it could play havoc on investor sentiment.

“We are not de-linked from the global market, but at the same time we did not face the magnitude of crisis faced by the Western markets. Slowdown witnessed in Indian was the result of global slowdown and that goes to show that we are connected to the global economy,” said Rajnikant Patel, president, Reliance Money.

Indian market has been sensitive to volatility and growth rate dropping below 6 per cent due to inadequate monsoon and global economy. In case that happens, the entire ‘India story’ would come under clouds.