A Macroeconomic Outlook
Global growth to revive in early 2010
With growth falling to its slowest pace since the 2001-2002 recession, we believe that the global economy will undergo a major downturn in 2009. This is because the financial environment is likely to remain challenging as sustained deleveraging (selling of assets to cover losses) by financial institutions globally will reduce credit growth to very low levels in both the advanced and emerging economies. Besides, deleveraging will continue to put significant pressure on the prices of asset classes such as equity, commodity and real estate around the world.
Despite the various fiscal and monetary actions taken by the governments and central banks around the world, we expect a gradual recovery to get underway only in late 2009 or early 2010. As a result, global growth is expected to revive to 44.5% from 2010, benefiting from increased government spending, strong productivity growth, and improved policy frameworks. Moreover, stability in commodity prices and the housing market, along with the injection of liquidity in the financial markets, should support the eventual recovery.
Domestic economy likely to follow suit
In light of the worsening economic conditions in the advanced economies, we expect the domestic economic
growth to decelerate in the next 45 quarters. In the current tight liquidity scenario, while Industrial sector
growth has slowed down considerably as compared to the last year, we believe the slowdown will gradually
spread to the Services sector, thereby resulting in the moderation of GDP growth to 77.5% for FY09 and
around 6-6.5% for FY10.
However, in our view, the various fiscal and monetary measures taken by the government and the RBI,
respectively, to prop up the economic growth can certainly lift the domestic demand and investment outlook for FY09 and FY10. As the money market liquidity is improving and inflation is steadily coming down, we
anticipate interest rates to reduce, leading to increased demand for both corporate and retail credit. Besides,
various fiscal measures for the Manufacturing and Infrastructure sectors should boost investments in the
Industrial sector, creating a multiplier effect across the economy.
Moreover, we believe that once the current crisis eases and confidence returns to the global financial markets, the Indian economy will revive faster than most other economies due to its limited exposure to exports.
Besides, the liquidity scenario is also expected to improve as FII inflows will likely revive the Indian equity
markets.
Valuations are attractive
We believe that the current share prices already discount the events and scenario of the coming 9-12 months.
This is the reason why the P/E multiple of the Sensex has recently fallen to 11x (the lowest since 2000),
discounting the recession in the developed markets and the slowdown in the emerging countries, including
India, for 2009. Consequently, we believe that the expected recovery in 2010 will start reflecting in the
valuations in the next 36 months. This makes various stocks across the sectors very attractive value picks
with a medium-to-long-term investment horizon.
What Bill Gates and Warren Buffet have to say
Two of the richest in the world were asked what they would invest in during these tough economic times they both responded independently that they would invest in themselves.
People or governments can take your money, your houses or your posessions. However, they cannot take away your skills and knowledge. Buffet said that even if everyone was getting paid in sea shells that if your skill set was in demand you would be getting the most sea shells. Your skills are portable and nobody can take them from you.
SECTORS
Power
Information Techonology
Metal and Mining
Banking
Disclaimer:
No action is solicited on the basis of the contents of this report.
This material is for the general information of the authorized recipient, and we are not soliciting any action based upon it. This report is not to be considered as an offer to sell or the solicitation of an offer to buy any stock or derivative in any jurisdiction where such an offer or solicitation would be illegal. You are advised to independently evaluate the investments and strategies discussed herein and also seek the advice of your financial adviser.
Past performance is not a guide for future performance. The value of, and income from investments may vary because of changes in the macro and micro economic conditions. Past performance is not necessarily a guide to future performance.
This report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. Any opinions expressed here in reflect judgments at this date and are subject to change without notice. We are not under any obligation to tell you when opinions or information in this report change. In addition, ISL has no obligation to continue to publish reports on all the stocks currently under its coverage or to notify you in the event it terminates its coverage. We shall in no way be responsible for any loss or damage that may arise to any person from any error in the information contained in this report.
The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal
views about the subject stock and no part of his or her compensation was, is or will be, directly or indirectly related to
specific recommendations or views expressed in this report. The information given herein should be
treated as only factor, while making investment decision. The report does not provide individually tailor-made
investment advice. We recommends that investors independently evaluate particular
investments and strategies, and encourages investors to seek the advice of a financial adviser. We shall not be responsible for any transaction conducted based on the information given in this report, which is in violation of rules and regulations of National Stock Exchange or Bombay Stock Exchange.
Astrology is the study of the zodiac, planets, nakshatras(asterisms), the rising stars, planets (bhavas), yogas, dasas and their effects and transits. It enables the casting and reading of horoscope, kundali, janampatri. For its complete reading tables of correction for various cities, sidereal time, nakshatra divisions, vimshottri dasas, navamsas, etc. are also used.
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NUMEROLOGY assigns numbers to each planet:
1--SUN
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6--VENUS
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8--SATURN
9--MARS
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