— Facing weak domestic demand, US and Europe are looking for weaker currencies to support trade sector
— However, China is reluctant to allow meaningful RMB appreciation (Japan also worried about JPY appreciation). This could lead to trade tensions building up
— For financial markets, it is concerns on growth Vs comfort of liquidity
Economic momentum in India remains on a strong footing
— Robust industrial growth and healthy monsoons to sustain the growth momentum
— Inflation concerns are easing; RBI embarking wait and watch approach
— Credit growth on a recovery path; to further accelerate in H2FY11
However concerns remain
— BoP situation remains a concern, with current account deficit on a widening trend
— Paper issuances an overhang but FII flows to remain supportive
— Valuations vis-à-vis EMs appear higher but pace of earnings revisions also stronger
India on strong footing; growth propelled by consumption and capex
— Consumption expected to be boosted by strong monsoons, easing inflation and rising salaries
— In capex, power continues to be the dominant part with focus now shifting to operational capex such as mining and material handling, transmission towers, etc
Sectors to play
— Consumption: autos, media, airlines, real estate
— Capex: Material handling, earth moving equipment for mining, transmission towers for power evacuation
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