As many investors across the world were afraid from the “Dubai Debacle” that occurred few days back, it didn’t affect much to the Indian corporates. On the other side talking about the uncertainty of the CAT Paper is more provoking as “IIMs” failed to live up to the expectation on world's standards. All along these ifs and buts came one news which brought cheers to many .Yes! India’s GDP growth was ahead of its expectation posted as 7.9%. Moreover it would be weird to know that this has created concern for the Indian government whether the Govt. should move forward with stimulus packages as planned for the economy or just stop pumping more money. The stimulus packages as designed by the govt. of India during hard times when the global economy was crippling with recession acted as relief to the whole business community. Stimulus packages were started from 7thdec 2008 when the 1st stimulus package of 300 million dollars was pumped into the economy. As per plans four stimulus packages were to be given to boost the Indian economy. The 2nd stimulus package later came on Feb. 2009 and the third one in April 2009 . Each time the stimulus package was released voices were echoing about the expenditure, however the explanation, understanding and the support shown by Indian Govt. in those situation was appreciable. GDP of 7.9% is still lower than the GDP growth shown by CHINA (8.9% in the 3rd quarter). There is nothing to be overexcited due to quarter results as it is a small proportion of the overall growth and due to bad monsoon the growth of the agriculture sector was merely around 0.9% (thank god at least its positive).The major contributor was the manufacturing sector which grew 11.9% well supported by the service sector.
There is another twist to all this figures if analyzed. There is a huge increase in the FDIs and FIIs, if we look back to 2008 we realize that one of the major cause of the black Monday was when Sensex showed the steepest fall with The Bombay Stock Exchange (BSE) Sensitive Index (Sensex) crashed by 2062 points. According to estimates investors lost Rs 6 lakh 69 thousand 375 crore on a single day, termed as Black Monday by market experts.Also the same day FIIs and FDIs retrieved their huge amount of cash. Moving on the similar trend it’s noticeable that FII investment toward the real estate has jumped up by 430% in last couple of month which is alarming leading to the situation of overvaluation. Its astonishing to know that the FII and FDI investment has jumped from 635 crore on 30thNovember to 886 crore on 2nd dec. just couple of days after the announcement it has approximately icreased to 30%. As stimulus package still continue to flow in America the investors are able to get loan for interest just above 0% and will be able to earn huge returns on investment primarily in the developing countries like India, china , brazil and Russia. Even the "Global Investment Trends Monitor", or GITM released by FDI proves that.
RBI took an immediate step during the recession by decreasing lending interest rate by 425 basis points and additionally the stimulus packages very well supported the India economy. Any change could have hampered India’s growth, but due to bad monsoon and increased inflation whether the growth will be sustainable or not is what we should be looking into. As analysts across the world will keep an eye on this so will be the ANALYSTS from IGSM…. So keep reading ANALYSTS BLOG.....
Very good stories~~ Thanks for ur sharing~~!! ........................................
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