E-Paper
Analysts hint at GDP bounce and recovery in 2010
One thing experts agree on is that India growth story would gather steam again in 2010. They have their reasons and formula to arrive at the conclusion, and market movements are substantiating this view with upbeat sentiments and steadily increasing volumes.
One thing experts agree on is that India growth story would gather steam again in 2010. They have their reasons and formula to arrive at the conclusion, and market movements are substantiating this view with upbeat sentiments and steadily increasing volumes.
A study by Angel Broking said markets start gaining four quarters ahead of the actual gross domestic product (GDP) growth and the up move is presently being noticed. “As contraction in markets stabilise, markets start moving up,” said Hitesh Agrawal, head, research, Angel Broking. “We have been noticing this up move since some time now. Based on this, we can safely say that good GDP growth is bound to happen in 2010.”
Substantiating his claim are the March-April numbers of foreign institutional investors’ mutual fund (MF) investments. FIIs have invested over Rs 5,000 crore and MFs put in Rs over 1,250 crore in said period. Though they are still in the negative when seen year-to-date, investor sentiments look good with over 60 per cent of trades coming from retail traders. Markets have been witnessing increase in investments every month. Each day during March-April period, the market saw turnover of Rs 90,000 crore.
Manoj Vohra, research head, Economist Intelligence Unit, believes clearing of inventories and effect of stimulus packages are likely to take around 12 months to set in.
Warning against being complacent with early signs of recovery, Vohra said, “Early signs of worst are behind us but the recovery will start only in 2010. What we are seeing now is a glimmer of hope, it would not be a sharp recovery.”
Yuwa Hedrick-Wong, economic advisor, MasterCard Worldwide, predicted flow of non-resident Indians’ funds in the second half of 2009, which would boost growth in 2010.
Counting positives, he said, “The Indian central bank had kept interest rates high, which resulted in high capital efficiency through quality investments by corporate sector. The business and consumer confidence is also high in India.”
Indian and Asian markets have been affected by high US unemployment rate and are unlikely to be hit more. “Spiking of unemployment in the US is likely to help the economy grow with entrepreneurs cutting cost to improve yields. This, coupled with fiscal stimulus, would start showing effect in the US in the second half of 2009 and global recovery would coincide,” said Hedrick-Wong.
