I think with rising stocks and growing investments, this financial boom can be sustained over a long period of time. In the first 60 days of office of the government we have seen many green-shoots, representing a turnaround in the economy.
The Modi-led Government was elected with the people’s desire to vote for change. Indians no longer wants to suffer the structural problems of unemployment, lack of infrastructure facilities, inadequate governance, etc. We have seen the first signs of market optimism when Modi Government was elected and the stock markets grew at all time highs. The CNX Nifty index has risen around 35% in year on year basis.
FIIs are injecting money in our economy. They are bullish in our stocks. They are inching their stakes to the highest level in atleast 10 years. They are placing bullish bets on the revival of our economy. This is a bullish sign for investors. FDI are encouraged by the government so that there is more of capital inflows in the country and the economic sentiment can be increased. The government is planning to raise the limit in FDI in Insurance to 49% to fix the problem of capital in the insurance sector.
Businesses and Industry have strong market sentiment. The first quarter results for April-June 2014 have shown on an average 20 % growth in profit margin in the Sensex set of 30 leading companies.
The government has before them a very challenging economic situation in front of them. With around 5% GDP growth rate and high inflation, the government has to revive the sustainable economic growth of the country. The overall market sentiment is positive. In the sense, people believe the Government will fix these problems and revive the economic growth of the country.
The government is fixing these structural problems first. We might not be able to see the results in a short period of 1 year. But in the next 3-4 years or by the end of their term we will be seeing the fruits of their hard work i.e. the base for laying the foundation for revival economic growth will be ready.
The budget statement revealed small steps which will have great impact on the economy. This is the initial stage of revival of economic growth in the country. If the policies which they have planned are implemented then we will be able to see the impact sooner.
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