Two Concerns for Indian Market

Quick recovery of Indian stock market was driven by various factors including global recovery, an assurance of stable government and futuristic potential of Industrial growth in India. I do not have any doubt in longer term. In short run, i have two doubts which could affect performance of market.

The first is the poor monsoon, which was visible but MET has accepted and announced formally a little late. Stock market reacted and a downward pressure on prices can be seen in last three days of trade. Recently Godrej Industries chairman Mr Adi Godrej shared his view on the impact of poor monsoon on economy and estimated agricultural growth could be reduced by 5 % which means around 0.25% of overall reduction in GDP growth rate.

The second concern is, despite a good financial results in quarter one across industries, according to Crisil, India Inc's planned capex expenditure will be dropped by 25% over next three years. Any guess on impact on GDP growth? Well when share prices of almost all industry recovered in a period no one would have expected, it will be interesting to see the the impact along with growth in production capacities of various industries in near future.