Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaway
To us, the Indian economy is off the celebrated 8%+ growth path. And now
this should be the number one economic concern. The causes are not all in the
global environment. We present a basket of signs to point that something is
amiss. More importantly, we discuss what we deem as the true drivers of longterm
growth and what policy action is needed as a solution. Until efforts are
being made to address growth, or we see signs of global stability, we maintain
our defensive bias on equities.
Needed first and foremost – an admission that growth is off: We study the past
relationships of 12 high frequency domestic economic indicators with GDP. All of them
suggest that current domestic growth is likely lower than the headline published GDP
growth with more slowdown ahead.
Not a cyclical issue and not a secondary issue: We argue that the ongoing decline in
the growth rate is not just due to cyclical/global reasons that would mend themselves over
time. Growth revival needs active effort and without recovery, many other economic issues
that are currently perceived as more severe – like inflation, fiscal deficit or the currency –
could get worse.
Five points to ponder on the nature of Indian growth to arrive at the right
policy mix: For higher, less cyclical, long-term growth, we discuss in detail the following
five points: 1) Demographics play little role in India’s growth; 2) Growth is fuelled when
consumption is growing slower than GDP; 3) Savings rate has stalled, particularly the
productive savings; 4) Savings’ conversion into investment too has stalled and for reasons
other than high interest rates; and 5) Negative cash flow economy would need global
stability for near-term relief.
With no policy support for growth, we stay defensive: Internal economic circularities
could take a vicious turn for the Indian economy if the world remains unstable and in the
absence of strong policy support for growth. These are only risks as of now, but rising. We
see risks of further downside for the index and maintain OW on consumer sectors, telcos
and stable earnings companies.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key Takeaway
To us, the Indian economy is off the celebrated 8%+ growth path. And now
this should be the number one economic concern. The causes are not all in the
global environment. We present a basket of signs to point that something is
amiss. More importantly, we discuss what we deem as the true drivers of longterm
growth and what policy action is needed as a solution. Until efforts are
being made to address growth, or we see signs of global stability, we maintain
our defensive bias on equities.
Needed first and foremost – an admission that growth is off: We study the past
relationships of 12 high frequency domestic economic indicators with GDP. All of them
suggest that current domestic growth is likely lower than the headline published GDP
growth with more slowdown ahead.
Not a cyclical issue and not a secondary issue: We argue that the ongoing decline in
the growth rate is not just due to cyclical/global reasons that would mend themselves over
time. Growth revival needs active effort and without recovery, many other economic issues
that are currently perceived as more severe – like inflation, fiscal deficit or the currency –
could get worse.
Five points to ponder on the nature of Indian growth to arrive at the right
policy mix: For higher, less cyclical, long-term growth, we discuss in detail the following
five points: 1) Demographics play little role in India’s growth; 2) Growth is fuelled when
consumption is growing slower than GDP; 3) Savings rate has stalled, particularly the
productive savings; 4) Savings’ conversion into investment too has stalled and for reasons
other than high interest rates; and 5) Negative cash flow economy would need global
stability for near-term relief.
With no policy support for growth, we stay defensive: Internal economic circularities
could take a vicious turn for the Indian economy if the world remains unstable and in the
absence of strong policy support for growth. These are only risks as of now, but rising. We
see risks of further downside for the index and maintain OW on consumer sectors, telcos
and stable earnings companies.
No comments:
Post a Comment