27th November, 2008
The Indian stock markets have gone through a very rough patch since the beginging of this year with the Bombay Stock Index (BSE Sensex) losing almost 67 percent of its value. Foreign institunal investors have been the biggest sellers in the Indian Equity, but there are others who are cherry picking stocks in the current stock market meltdown.
Most such investors and other experts see this current turbulence as a great opportunity to buy Indian stocks. They believe that their investments will give them thumping returns in the next two to three years.
Mark Mobius is leading a return of fund managers to India as the nation's biggest banks say demand for cars and homes will help them ride out a global recession.
``Domestic industries can build high profits and growth,'' Mark Mobius, 72, who manages more than $24 billion in emerging- market assets as executive chairman at San Mateo, California based Templeton Asset Management Ltd., said in a Nov. 22 interview. He is buying Indian consumer-related stocks.
Bulls on India were clobbered this year as the rupee fell 21 percent to a record and the Sensex stock index slumped 67 percent. Executives at Mumbai-based State Bank of India, the nation's biggest lender, and Housing Development Finance Corp., the largest mortgage firm, said investors ignore the potential for interest-rate cuts and rural spending to fuel demand.
Finance Minister P Chidambaram predicted last week economic growth will ``bounce back'' to 9 percent next year, from at least 7 percent this year, driven by record crop plantings, public sector pay increases and tax breaks. The International Monetary Fund in Washington said this month that India may expand 6.3 percent in 2009, the fastest after China among the world's 20 biggest economies.
Sustained expansion in the world's second-most populous nation would help lift 456 million people out of poverty and underpin the shrinking economies of Japan, Europe and the U.S.
Interest rate cut to spur growth
Domestic consumption accounts for more than 55 percent of India's economy, compared with 37 percent of gross domestic product in China. P Chidambaram said in a Nov. 18 interview that the central bank has scope to cut borrowing costs as inflation slows to a level ``we can live with.''
``The impact of the global financial turmoil has been muted due to the overall strength of domestic demand,'' the finance ministry said in a report released in New Delhi today.
New Delhi-based Jindal Steel & Power Ltd. expects metal demand in India to revive in the next few months as the government increases spending on roads, bridges and ports. The company plans to maintain its 1.4 million ton production of rails, beams and plates for now, Managing Director Naveen Jindal said today in a television interview. Jindal is getting enough orders from customers, he said, without giving details.
Strong Rural Economy
India is adding 100 kilometers (62 miles a day) of new roads under a $27 billion construction program, bringing urban markets within reach of 60 million farmers in the past five years. Even Detroit-based General Motors Corp., seeking a U.S. government bailout, is hiring 500 workers as Indian car sales, which fell the most in three years last month, ``should improve,'' said P. Balendran, a vice president at the local unit.
``My rural business is growing faster than my urban business,'' State Bank Chairman Om Prakash Bhatt, 57, said in a Nov. 18 interview. ``The psychology and the expectation of the people have changed. They are looking for a better life, they are actually enjoying a better life.''
State Bank plans to hire 25,000 staff and open 2,000 branches in year ahead, Bhatt said. Housing Development Finance, or HDFC, predicts lending will increase more than 20 percent, Managing Director Keki Mistry said in a Nov. 19 interview.
Rupee Revaluati |
