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Will India’s foreseeable GDP growth hold its rhythm?

Possible future Market trend with a vague GDP outlook

The Indian economy has taken quite a battering of late. From being marginalized by reducing its credit rating by Standard & Poor, to becoming a country tracked by activists on charges of corruption and “unreasonable” reforms, the latest setback came from IMF who asserted on a subdued growth forecast to 4.9% from 6.1% for 2012.
The Finance Minister, Mr. Chidambaram allayed some of the fears for what was once a burgeoning economy by stating some positive for the Indian economy for the current year and the ones to come.

According to Mr. Chidambaram as reported on Reuters, Indian economy should despite the negativity see growth at 5-5.6% growth in the current year at close while holding some promise for the coming years to see growth increase to above 7% rising further to what was a figure standard by 2014-2015.

The Indian Economy was once hailed as one to look out for between 2004 and 2008 which had seen growth posted above 9% with recession year seeing the best in India. When across the globe recession had taken its toll following the Lehmann debacle, India still managed to surge out strong albeit a bit damaged. So if some promise does hold, we should see the Indian economy taking a strong U-turn following the coming turn of events.

As far as our own domestic markets are concerned, things continue to provide us a reason to hold on for positivity in the future.
The only concern to come out of three years of depreciating GDP numbers growth is inflation which has risen to 7.5%. That in turn is the game-changer. While Inflation may be viewed upon as a social evil it might actually benefit market traders. Rise in Interest rates by RBI will see Interest sensitive sectors outperform. A win-win situation?

Why things sound beneficial for Investors? Economic Growth v/s Markets: Poor Cousins
While things were very different in the past circa 1920s, 1950s etc, today a negative outlook on economy is viewed as beneficial for the Stock market. Why? The answer is simple while a good economic growth outlook promises good job report; market susceptibility towards positivity is restrained as due an already charged up inflamed market results which is a direct consequence of expanding money supply.

Although it sounds au contraire, Markets seem as most viable for Investments under poor economic growth, especially with positive influences and views of the Government Finance ministry. FIIs and DIIs view such opportunities as most viable as has just been rested by Mr. Chidambaram, certain acts in the economy will most likely see the Indian market rise up in the coming future with a rally in stocks expected

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