In my earlier blog, I mentioned that the Indian economy should grow at a
steady and sustainable pace and should not be forced into a bull run. The GDP
growth rate at 5.5%-6%, for next two-three fiscal years, would be suitable for
a long-run sustainable economic growth.
Although, the green shoots of economic growth are visible, it is the
time to nurture them well and wait patiently to see how they stem up before
actually harvesting them.
Investment houses, brokers and analysts seem to be in a hurry to show
off their optimism and in their desperation, are ignoring that the growth could
only be sustainable, when it is consolidated well before moving to the next
level.
Broking houses and investment analysts are justified in their enthusiasm
in projecting GDP growth of 6.5% by FY 17, as they have not seen such level of optimism
in the market, for at least, last 5 years.
Meanwhile, investors should consider that while, CPI has touched below 8%
mark, any rise in global Oil prices and Rupee-Dollar equation may see Inflation
going up.
The economists and bankers like Mr Keki Mistry, Chairman HDFC, Mr Aditya
Puri, MD, HDFC Bank have been quoted in media expressing that it might take 6-8
quarters, before the investment measures would start yielding results.
Also, the key sectors i.e. Manufacturing, Agriculture, Energy,
Infrastructure are still in the recovery mode. Although promoters and investors
have subscribed to the growth story, they are still not confident of putting
money on the block. The investment in manufacturing and infrastructure sector are
yet to be rolled out and require traveling some distance before being reflected
in the economic data.
The broking houses and investment analysts should work towards creating
a environment conducive for FPOs and IPOs, so that retail investors may
participate in the growth story as secondary market has become quite expensive.
Again, the word of caution would be on valuation of such FPOs/ IPOs. SEBI
must ensure that the Investment Bankers / Promoters must leave enough on the
table for the Retail Investors.
These would be good options for corporate to raise equity at a reasonable
cost, when cost of funding has become unviable.
But, investors must discount over-enthusiasm and the Economists should consider
all aspects before projecting GDP growth numbers as such inflated Economic
Data, infused with over-enthusiasm, may not only hamper investor interests but
also may prove fatal for overall economy as it would deter the investor
sentiments.
reference: http://timesofindia.indiatimes.com/city/mumbai/India-Rating-raises-India-GDP-forecast/articleshow/39809339.cms
reference: http://timesofindia.indiatimes.com/city/mumbai/India-Rating-raises-India-GDP-forecast/articleshow/39809339.cms
