- The document discusses emerging markets, focusing on India and China. It argues that while China's economy is slowing due to factors like a housing bubble and overcapacity, India's economy remains strong, as evidenced by positive manufacturing and services data as well as macroeconomic stability.
- The Indian budget aims to further boost the economy through tax cuts, infrastructure spending, and reforms. With its favorable demographics and policies under Modi, India has strong long-term growth potential and opportunities for investors.
- While the Indian stock market may be overpriced, now could be a good time for entry due to the country's economic resilience and promising outlook. The document recommends sectors like banking and construction.
UK economy is showing signs of posting a strong pull-back. China on the other hand is facing the prospects of a slower growth this year. We cover this in the section on *Global Trends* in this month’s issue of Economy Matters.
In the section on *Domestic Trends*, we discuss the trends emanating out of the recent releases on GDP, Balance of Payments, IIP and Inflation during the month of February 2014.
In *Investment Tracker*, we analyse the latest data on investment proposals.
The *Sectoral* spotlight for this issue is on Travel & Tourism, which holds strategic importance in the Indian economy providing several socio economic benefits.
In *Focus of the Month*, we discuss the employment creation challenge that the economy is facing currently. In addition to our own analysis, we have carried articles from eminent experts on the subject.
London, 27 November 2013 MNI INDIA BUSINESS SENTIMENT EMBARGOED UNTIL 9.45 A.M. NEW DELHI TIME. MNI India Business Indicator Increased to 64.6 in November from 59.8 in October. Production and New Orders Recover. Thirteen out of the 15 current conditions indicators included in the report increased in November. Employment was the only indicator to decline and Inventories remained unchanged compared with October.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
Signature content of MTBiz is its Article of the Month (AoM), as depicted on Cover Page of each issue, with featured focus on different issues that fall into the wide definition of Market, Business, Organization and Leadership. The AoM also covers areas on Innovation, Central Banking, Monetary Policy, National Budget, Economic Depression or Growth and Capital Market. Scale of coverage of the AoM both, global and local subject to each issue.
MTBiz is a monthly Market Review produced and distributed by Group R&D, MTB since 2009.
http://bit.ly/GEWaout2014
Les dirigeants sont de plus en plus conscients du potentiel inexploité de l'Afrique sub-saharienne. La population de l'Afrique subsaharienne est devrait croître plus rapidement que dans toutes les autres régions du monde. En conséquence, en 2040, le Continent africain devrait avoir la plus grande force de travail du monde et pourrait avoir une croissance économique plus rapide que n'importe quelle autre région.
UK economy is showing signs of posting a strong pull-back. China on the other hand is facing the prospects of a slower growth this year. We cover this in the section on *Global Trends* in this month’s issue of Economy Matters.
In the section on *Domestic Trends*, we discuss the trends emanating out of the recent releases on GDP, Balance of Payments, IIP and Inflation during the month of February 2014.
In *Investment Tracker*, we analyse the latest data on investment proposals.
The *Sectoral* spotlight for this issue is on Travel & Tourism, which holds strategic importance in the Indian economy providing several socio economic benefits.
In *Focus of the Month*, we discuss the employment creation challenge that the economy is facing currently. In addition to our own analysis, we have carried articles from eminent experts on the subject.
London, 27 November 2013 MNI INDIA BUSINESS SENTIMENT EMBARGOED UNTIL 9.45 A.M. NEW DELHI TIME. MNI India Business Indicator Increased to 64.6 in November from 59.8 in October. Production and New Orders Recover. Thirteen out of the 15 current conditions indicators included in the report increased in November. Employment was the only indicator to decline and Inventories remained unchanged compared with October.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
Signature content of MTBiz is its Article of the Month (AoM), as depicted on Cover Page of each issue, with featured focus on different issues that fall into the wide definition of Market, Business, Organization and Leadership. The AoM also covers areas on Innovation, Central Banking, Monetary Policy, National Budget, Economic Depression or Growth and Capital Market. Scale of coverage of the AoM both, global and local subject to each issue.
MTBiz is a monthly Market Review produced and distributed by Group R&D, MTB since 2009.
http://bit.ly/GEWaout2014
Les dirigeants sont de plus en plus conscients du potentiel inexploité de l'Afrique sub-saharienne. La population de l'Afrique subsaharienne est devrait croître plus rapidement que dans toutes les autres régions du monde. En conséquence, en 2040, le Continent africain devrait avoir la plus grande force de travail du monde et pourrait avoir une croissance économique plus rapide que n'importe quelle autre région.
In the current issue of Economy Matters, we analyse the growth trends emanating out of China, Japan and US, in the section on Global Trends. In Domestic Trends, data trends in IIP, inflation and trade are analysed. The Sectoral Spotlight for this issue is on ‘Employment Potential of the Road Transport Sector’. In Focus of the Month, we evaluate the three recently released reports by DIPP, World Bank and World Economic Forum on State of Competitiveness in India.
In the July-August 2014 Issue of Economy Matters, we track the economic developments in US and China in Global Trends. In the section on Domestic Trends, we discuss the trends emanating out of the recent releases on IIP, Inflation, Fiscal, Trade & Monetary Policy. The Sectoral spotlight for this issue is on the Implications of Jobless Growth. In Focus of the Month, the spotlight is on Textiles Sector. Special Feature discusses the importance of Hospitality Sector in India.
The organized sector in India created 704,800 jobs between January 2011 and June 2011 and 369,200 more jobs are expected to be created by September 2011, according to the latest findings of Ma Foi Randstad Employment Trends Survey – Wave2.
The survey was conducted among 690 companies across 13 industry segments panning 8 Indian cities. The respondents included members of senior management and HR professionals who were questioned on specific areas relating to hiring plans across various timelines, manpower requirements for the current quarter vis-à-vis the last two quarters, and their views on how they see the job market to be in the year 2011. While the Indian economy is passing through a delicate phase with certain sectors looking at a bleak market in the near future, there are others who have performed well and continue to perform as per predictions made in the beginning of the year, thus reflecting buoyancy among employers.
According to the survey, the Healthcare sector has remained the largest employment generator with 1, 15,000 jobs created in H1, followed by the Hospitality sector with 94,000 jobs created during the same period. The IT/ITeS sector, which witnessed a turnaround in 2010-11 by posting a double digit growth, continues to grow at the same pace and has added 91,000 jobs in H1. In the cities, New Delhi, Mumbai and Chennai continue to lead the job market job generating 1,39,700 jobs between January and June 2011, as predicted earlier this year
Role of CFO in Economic Turnaround, Present Macro-Economic Conditions, New Changes in Reforms & Policies, Evolving Role of CFO , Impact of Changes on CFO
India's annual economic growth slumped in the January-March quarter to a nine-year low of 5.3% as the manufacturing sector shrank and a fall in the rupee to a record low suggests the economy remains under pressure in the current quarter.
In the current issue of Economy Matters, we analyse the growth trends emanating out of China, Japan and US, in the section on Global Trends. In Domestic Trends, data trends in IIP, inflation and trade are analysed. The Sectoral Spotlight for this issue is on ‘Employment Potential of the Road Transport Sector’. In Focus of the Month, we evaluate the three recently released reports by DIPP, World Bank and World Economic Forum on State of Competitiveness in India.
In the July-August 2014 Issue of Economy Matters, we track the economic developments in US and China in Global Trends. In the section on Domestic Trends, we discuss the trends emanating out of the recent releases on IIP, Inflation, Fiscal, Trade & Monetary Policy. The Sectoral spotlight for this issue is on the Implications of Jobless Growth. In Focus of the Month, the spotlight is on Textiles Sector. Special Feature discusses the importance of Hospitality Sector in India.
The organized sector in India created 704,800 jobs between January 2011 and June 2011 and 369,200 more jobs are expected to be created by September 2011, according to the latest findings of Ma Foi Randstad Employment Trends Survey – Wave2.
The survey was conducted among 690 companies across 13 industry segments panning 8 Indian cities. The respondents included members of senior management and HR professionals who were questioned on specific areas relating to hiring plans across various timelines, manpower requirements for the current quarter vis-à-vis the last two quarters, and their views on how they see the job market to be in the year 2011. While the Indian economy is passing through a delicate phase with certain sectors looking at a bleak market in the near future, there are others who have performed well and continue to perform as per predictions made in the beginning of the year, thus reflecting buoyancy among employers.
According to the survey, the Healthcare sector has remained the largest employment generator with 1, 15,000 jobs created in H1, followed by the Hospitality sector with 94,000 jobs created during the same period. The IT/ITeS sector, which witnessed a turnaround in 2010-11 by posting a double digit growth, continues to grow at the same pace and has added 91,000 jobs in H1. In the cities, New Delhi, Mumbai and Chennai continue to lead the job market job generating 1,39,700 jobs between January and June 2011, as predicted earlier this year
Role of CFO in Economic Turnaround, Present Macro-Economic Conditions, New Changes in Reforms & Policies, Evolving Role of CFO , Impact of Changes on CFO
India's annual economic growth slumped in the January-March quarter to a nine-year low of 5.3% as the manufacturing sector shrank and a fall in the rupee to a record low suggests the economy remains under pressure in the current quarter.
The curious case of missing corporate profitabilityAshutosh Bhargava
The global economy is currently in its sixth year of expansion post the GFC. However, even in this advanced stage of the global business cycle, what is peculiar is that many markets are experiencing a profit recession without an economic recession. This phenomenon is most evident in the world’s two largest economies, US and China.
INDIA is one of the oldest civilizations in the world
with a kaleidoscopic variety and rich cultural heritage.
It is the seventh-largest country by area, the second-most
populous country with over 1.2 billion people, and the
most populous democracy in the world. In the present
scenario, India’s economy is the fourth largest by purchasing
power parity (PPP) and 10th largest by nominal
gross domestic product (GDP), globally.
India has seen a systematic transition from being a
closed door economy to an open economy since the beginning
of economic reforms in the country in 1991.
These reforms have had a far-reaching impact and have
helped India unleash its enormous growth potential.
Today India is one of the fastest growing economies in
the world and has emerged as a key destination for foreign
investors in recent years. According to UNCTAD’s
World Investment Prospects Survey 2012–2014, India is
the third-most attractive destination for FDI (after China
and the US) in the world.
India’s GDP has also grown at around 7.9 per cent between
2003 and 2012. This trend, according to the International
Monetary Fund (IMF), is likely to continue for
the next five years with an average GDP growth rate of
7.7 per cent per annum till 2017. India’s GDP for 2015,
valued at US$ 2.183 trillion at current prices is the 10th
largest in the world1.
The world's second largest economy, China, is slowly recovering. Even more importantly, the latest forecasts by the World Bank suggest that high-income economies appear to be finally turning the corner. We cover this in the section on Global Trends in this month’s issue of Economy Matters.
In the section on Domestic Trends, we discuss the trends emanating out of the recent releases on GDP, IIP, Inflation, trade, and monetary policy.
The Sectoral spotlight for this issue is on Manufacturing, which remains an important sector for realizing the higher growth potential of the economy.
The section on Taxation dwells on BEPS and carries an interview with Mr. Akhilesh Ranjan, Joint Secretary, Ministry of Finance, Government of India on some critical international taxation issues.
In the Special Article, we provide a snapshot of Central Government’s fiscal health along with a detailed Q&A of Mr. R. Seshasayee, Past President & Chairman Economic Policy Council, CII, on the subject.
The section on Special Feature carries an article titled “The Tradeoffs for Policy Makers in India Today”, by Dr. Pronab Sen, Chairman, National Statistical Commission, Government of India.
Micro, Small and Medium Enterprises (MSMEs) sector is the backbone of the national economic structure and has acted as the bulwark for the Indian economy, providing it resilience to fend off global economic shocks and adversities. The development of the sector is extremely critical to meet the national imperatives of financial inclusion and generation of significant levels of employment across urban, rurban and rural areas and to catalyse socio-economic transformation.
Easy access to credit and finance remains one of the many challenges faced by the sector. Hence, in view of the sector's importance in the overall economic landscape, it is critical the MSME sector develops through the concerted efforts of various stakeholders, including banks and financial institutions, equity funds, industry majors and MNCs, regulators across various ministries at the Center and in the States, and trade associations, together, to create a forward-looking framework and ecosystem. The competitiveness of the MSME sector is critical for sustaining economic growth.
I ASEAN Busines Optimism Index Q4 2015 har vi har samlet det kvartalsvise indeks for seks markeder i Sydøstasien, som tilsammen stå for mere end 95% af ASEAN BNP. Der er tale om Indonesien, Malaysia, Filippinerne, Singapore, Thailand og Vietnam.
It gives me a pleasure to present the summary and analysis of Union Budget 2015.
While you may have the snapshot, here is a document which will not only give you crisp highlights, but would also decode the impact of Budget 2015 on You, Your company and Your sector.
Hope you find this analysis useful in taking business decisions and align your company's strategy with over all economic climate for the upcoming financial year.
Would love to hear your feedback on the usefulness of the same.
Deloitte India: What the union budget 2021 brings?aakash malhotra
The Union Budget of 2021 was presented on 1 February 2021 by the Finance Minister, Smt. Nirmala Sitharaman. Deloitte India analyses how the presented budget turned out against expectations. Experts bring forth Deloitte’s View regarding the key highlights of the budget. The presentation also studies the impact of the budget on tax and various industries including, the banking sector, insurance, and healthcare sector. Download here and learn more.
The current crisis is unprecedented in the sense that it has seriously impacted the liquidity, solvency and viability of a large number of businesses, all at the same time. The only way out of this crisis is to inflate a colossal bubble in asset prices, which is equally unprecedented. A global bubble will inflate in healthcare sector. far bigger and durable than the dotcom and subprime bubbles, as it deals with human lives directly. The politicians, bankers, investors, policy makers, administrators, businessmen, consumers et. al. who have spent weeks locked down in their houses fearing for their lives while watching the death statistics on media, would readily accept the need for much higher investment and spending on healthcare. In that sense, this bubble will be far more tangible, believable, acceptable and inflatable.
1. India emerges above the emerging markets; How to profit from this
Summary
Emerging Market Overview- Bullish on India and Mexico. Uncertain about China’s
direction. Concern over stalling growth rates in China.
China’s lack in sustained growth in 2014-factors such as housing bubble, over
capacity and a slowdown in exports and import
India’s Economic state- positive manufacturing, service industry data coupled with
macroeconomic stability keeps India in a good economic and financial state. Key
indicators such as PMI, current account levels, GDP growth show reasons for
optimism
Recap of India’s recent budget- Tax cuts, infrastructure boosts and AIF’s are some
reforms to be made this year. The government has hence focused on giving the
economy the necessary push to take off.
Growth Factors and Investment Catalyst – Factors like favourable demographics,
commodity cycles and Modi effect spur investor confidence in the long run
Indian Stock Market Outlook- positive and may be over priced, but now may be a
good entry time. Sector and stock recommendation should be based on a top down
approach and few recommendations in the Banking and Construction industry give.
Introduction-
The purpose of this article is to analyse the current economic condition of the emerging
market countries (BRIC nations) and show why India is in the most promising situation. The
length at which India and China have dominated the Asian markets can be seen by the names
encapsulated by the images used to portray them. China, conned the dragon is a giant,
aggressive force while the Elephant describes India’s big, powerful but limbering ungainly
image. I will show reasons for the optimism surrounding the recent budget proposed by the
Indian Finance minister, thus explaining why India is a potential outperformer. Brief
exploration of the key investment and growth catalyst coupled with investment ideas should
allow an investor to profit from this boom. The question is, can India outpace the dragon? If
so how, why and what can you do to gain from this.
Emerging Market Overview
The outlook for the emerging market covers 25 countries, but for perspective we will only be
considering India and China. It is sufficient to know that performance in emerging markets
have been varied, hence the overused but underutilized tool Diversification comes into play
.The relevance of emerging market equities lies in the fact that investors need to adapt to
future lower interest rates and stalling growth. Tepid growth implies that valuation of stocks
will be on the lower side, making macroeconomic research on sectors or countries that will
2. outpace the rest very relevant. India Sensex was the best performer in 2014 as clearly seen in
our table graph below.
Figure 1 Table shows varied growth among different indexes in Emerging Markets`
“Lower interest rates, combined with the lower bond yields they have created, will allow stock
returns to be better than they might be otherwise. Lower fixed-income yields can provide a
partial offset, as equities will look more attractive on a relative asset return basis,"
Figure 2 World Economy Forecast
Our attention is first directed towards China where economic growth is stalling. It is expected
that growth will decelerate. Firstly, we are aware that there is minimal data available around
the Chinese New Year period which implies momentum has been shifting. Stalling growth can
be attributed to the falling PMI. PMI (Purchasing Manger’s Index) has often been used as an
indicator of economic health of countries that are have a major chunk of their GDP attributed
to manufacturing. This implies that China's production , new order, supplier deliveries,
inventories and employment levels have fallenin 2015 and is looking to head in that direction.
3. ‘The official Purchasing Managers' Index (PMI) inched up to 49.9 in February from January's
49.8, a whisker below the 50-point level that separates growth from contraction on a monthly
basis’.
Figure 3 China's GDPforecast
Slowly, it has become evident that China’s initialrisewhich was built mainly on manufacturing
export led activity is now one of its greatest liability in its growth potential. China’s growth
currently is at its weakest in 24 years. 2014 was the first time in a century that China has
missed its official growth target, falling just short of the official goal of 7.5%. In the last two
years, growth deceleration moderated significantly, largely thanks to a variety of stimulus
measures. The People’s Bank of China cut interest rates and bank reserve requirements to
make more credit available, and financial deleveraging—reducing the growth of debt—has
been put on hold. Without such policy support, China’s GDP growth would have fallen further.
My personal prediction is that over the next 2 or 3 years, performance in China is not likely to
improve because of the following reasons 1) Potential real estate housing bubble (60 million
empty apartments await buyer, 2) Manufacturing dependence, over capacity, 3) Slowdown
in exports and imports, 4) Lack of driver, of growth Catalysts and 5) Investment is much larger
than consumption as a percentage their GDP. Note that these factors in themselves entail a
lot of analysis and hence we just take the key points without dwelling much into it. That being
said I will be more than happy to talk to any reader who wants to learn more about those
resounding factors.
India’s Current Economic State
India can be analogized to an Elephant riding in a wave of optimism albeit vulnerabilities
associated with persistent currency devaluations, economic slowdowns and persistent
inflation in the last 3 years. “Encouraged by the greater macro-economic stability and the
reformist intent and actions of the government, coupled with improved business sentiments
in the country.” Institutions like the IMF and the World Bank have presented an optimistic
growth outlook for India for the year 2015 and beyond. The possible headwinds to such
promising prospects, however, emanate from factors like inadequate support from the global
economy saddled with subdued demand conditions, particularly in Europe and Japan, recent
4. slowdown in China, and, on the domestic front, from possible spill-overs of below normal
agricultural growth and challenges relating to the massive requirements of skill creation and
infrastructural up gradation. The encouraging results from the Advance Estimates for 2014-
15 suggest that though the global sluggishness has partly fed into the lacklustre growth in
foreign trade; yet this downward pressure has been compensated by strong domestic
demand, keeping the growth momentum going
Key Numbers and Facts for the Manufacturing Sectors (Indian Budget Volume 2)
The PMI has risen from 52.9 to 53.3 which is signs of growth in the private sector. We
however do see that the manufacturing sector has outpaced the service sector at the
beginning of 2015Q1.
a growth of 6.2 per cent and 5.3 per cent respectively in 2012-13 and 2013-14
growthin manufacturingsectorwaschieflyonaccountof robustgrowth intextiles,apparels,
and leather products
The upwardrevisioninmanufacturinggrowthinthe newseriesalsoowestoinclusionof trade
carriedout bymanufacturingcompaniesinthe manufacturingsectoritself,whichwasearlier
part of the services sector.
Key Numbers and Facts for the Service Sectors (Indian Budget Volume 3)
Indian services companies reported sustained growth of new business in January, extending
the current sequence of expansion to nine months
Inputcostsfaced by Indianservicesfirmsroseforthesecond straightmonthin January,having
fallen for the first time in more than five-and-a-half years in November.
The rate of costinflation picked up to the sharpest in six months,althoughremained muted in
the context of historical data
A factorthatmay be concerning is that job creation rate wasslower than historicalaverages.
Weakest sectorial performance was financial services
Figure 4 CPI Trend (downwards and promising)
The figure above shows how inflation now is more controlled and pronounced. There
is a steep decline from Q42014 to Q1 2015. Though discussed later, India’s economy
is highly dependent on oil imports just like any other developing country. Sharp fall in
5. commodity prices not only propelled the manufacturing sector but it also controlled
inflation.
Figure 5 Current Account
Key FactsaboutCurrentAccount
2012 and 2013 sawthe wideningof thisdeficitmainlybecauseof currencyfluctuationsand
increasingimports
In 2014/2015 lowertrade deficitalongwithmoderate growthininvisiblesthatresultedin
lowerdeficitandsurge in capital inflows,enabledbyhigherportfolioinvestment,foreign
directinvestment(FDI),andexternal commercial borrowings(ECB)
Amongthe major economieswithaCAD,Indiaisthe secondlargestforeignexchange
reserve holderafterBrazil.India’sforeignexchange reservesatUS$ 330.2 billionason6
February2015 mainlycomprisedforeigncurrencyassetsamountingtoUS$ 305.0 billion,
accountingforabout 92.5 per centof the total.
Withincrease inreservesinthe firsthalf of 2014-15, all reserve basedtraditional external
sectorvulnerabilityindicatorshave improved
USD andRupee exchange rate hasremainedstable.Rupee hasappreciatedwrttothe Euro
and Yenowingto theirweakoutlook.
Improvement in thisaccount is a positive for the economy for the years to come. We normalize the
effects of commodity prices and currency fluctuation to come to that conclusion
6. Figure 6 India's GDP growth looks promising and 2016 mayeven hit double digit growth
‘The economy has been balkanised by local taxes levied at state borders, but cross-party support
for a national goods-and-services tax could create a true common market. The potential is there;
the question has always been whether it can be unleashed.’
Recap of Key pointsfrom India’s Budget
Arjun Jaitley- India’s finance minister recently unveiled the 2015 budget for the country. We
will recap the key factors to take from this from an international investor’s perspective. The
total size of the budget was $290 billion.
Tax- Corporate tax rates have reduced by 5% to now 25% over the next 4 years. The purpose
of this is for boost in spending and job creation. Prior to this change India’s corporate tax rates
was 33.99 percent, including various surcharges over the base rate, was higher than Asia's
average corporate tax rate of 21.91 percent in 2014, and a global average of 23.64 percent,
according to consultant KPMG. The importance of this news can be seen by how the Sensex
(Bombay Stock Exchange) shot up by 250 points. Thus not only will this increase value of
revenues for firms in India but it alsowelcomes foreign investment. There is room for personal
tax cuts, which willboost real income boosting the domestic economy. This is likely to happen
in the following years, considering the vastness and size of the Indian economy this can be a
real GDP per Capital booster. There was a complete abolition of the wealth tax.
Infrastructure - The budget included more than $11 billion in new infrastructure spending
aimed at upgrading the country’s overloaded roads, railways, ports and power plants. “I
think we’ve done a number of things here that are truly ground-breaking,” said Jayant Sinha,
the minister of state for finance, on Sunday. He cited the increased share of total tax
revenue being transferred to state governments and the creation of a sovereign-wealth
fund to invest in large infrastructure projects. The key impact of such investment projects in
boost in growth and attracting more investments.
Alternative Investment Funds- category of pooled-in investment vehicles for real estate,
private equity and hedge funds, is expected to give a boost for private equity industry in
7. India. The basically makes it easier for domestic investors , but the 2 existing vehicles (
Foreign Direct Investments and Foreign Portfolio Investors) will be removed making the AIF
the all inconclusive vehicle for foreign investors as well. The AIF’s come in 3 categories 1, 2
and 3.
Growth Factors and Catalyst 2015 and Beyond
Average workforce age- roughly half of the population of 1.25 billion is under the age of 25.
The people in India are entrepreneurial and the more the workforce gets trained the better
the future reduction in unemployment. The government has increasingly taken interest to
nurture the nation’s youth to take any economic opportunities that may arise. The formation
of the National Skill Mission that will consolidate efforts and outcomes and budgetary
allocations to financially support youth in their skilling efforts will enable the country to
benefit from its demographic dividend. The focus on job creation through the Make in India
program, and providing gainful employment to India's youth is commendable and a future
oriented outlook. The global economy is going to witness a shortage of young population by
2020 while India will be the one country youth surplus of 47 million. “India would need is that
these ‘surplus’ young people are healthy, suitably educated, and appropriately skilled to
contribute optimally to the economy.”…as stated by its 2015 Economic Survey.
Figure 7 GDP per Capita, shows increase in consumption likely in the future
As an oil importer- With commoditypricesranging onthe lower side, India willbenefit for this inthe medium to longterm.
Remember that India is a net importer of Oil, andthe lower commodityprices reduces its overall imports andflushes it
with more foreigncurrency. This mayhave aneffect of keeping its currencyrelativelystable whichis imperative for its
success inthe next 3 to 5 years.
8. Modi Effect-
Figure 8 Impact of Politics,Positive Modi Effect
How India has responded to government reforms
Narendra Modi’s India’s prime minister’s dynamic nature with expectation of reforms
increases the necessary hope the country needs to engage its resources. Over the past year,
since he was elected into power his main focus have been civil reform and structural
changes. The budget under Jaitley was the first reform outside the above mentioned facets
and personally I am very optimistic about. Arun Jaitley has pledge plans to create 100000
km’s of roads and commission five "ultra mega" power projects to help end electricity
shortages. The delay in deficit reduction gives the public sector the necessary kick-start it
needs to be the engine of growth.
India’s Equity Market Outlook. - Outperformer in 2014 despite weaker earnings in 2014Q4
9. Figure 9 Equity Market India
‘India is riding a waveof optimismafterpro-businessNarendra Modiwon theelections.Indian debt
lookslike good valuewithinflation falling.Robustearningsgrowth supports(pretty heady) equity
valuations,butvisibleprogresson reformsis needed formarketsto advancefurther’
The key driver to the Sensex last year was FDI’s and with our thesis before of potential
increased investments we project Indian equities to do better this year. The relative pricing
of Indian stocks may be high as the market trades at around 16 times.
Thispresentsagood entrypositionforinvestors,asthe budgetisprojectedtocause the Indian
marketto be lowerby150 pointsbythe endof the year.
10. Stock Picks
Larsen & Toubro (LTOUF)
ICICI Bank (IBN),
IShares MSCI India ETF (INDA)
HDFC Bank (HDB)
Sector Picks
Banks
Transportation
PowerStocks
Tech
Conclusion
Government reforms in the backdrop, its commitment to growth and investment might bolster the
Indianeconomyinthe longrun. The external sectorincludesthe optimisticmacroeconomicoutlook,
oil prices remaining relatively low and stable. We must not ignore uncertainties surrounding
conditionsinthe Eurozone,Greece.The likelihoodthatinterestratesinthe UnitedStateswillincrease
are factors tobe incorporatedinanyevaluationthatistobe done withthepricingof assets. Giventhe
above, and assuming normal monsoons better prospects in the world economy that could provide
impetusto higherexportsforIndianproducts and services,a growth of around8.5 per centis in the
realm of possibility in 2015-16. From my analysis, I would rank India as one of the most attractive
investmentdestinations,well above othercountries. Itrankswell abovethe mean for its investment
gradecategory, and also abovethemean fortheinvestmentcategory aboveit(on thebasisof thenew
growthestimates). The realityandprospectof highandrisinggrowth,combinedwithmacroeconomic
stability, is the promise of India going forward. The key will be the response of savings to improved
price andfinancial marketstability,andof investment,particularlyinthe crucial infrastructuresector,
to reform efforts of the Government that are underway.