The boom in India

from india infoline

Following are some of the key reasons for the 2003 bull run :–

Bountiful southwest monsoon and bumper foodgrains output

Better valuations of Indian equities compared to other emerging markets

GDP growth forecast of over 7% (Q2 GDP was 8%)

Historically low interest rates

Forex reserves kitty welling to over US$100bn

Stellar corporate performance during the first half of FY04

Improving relations between India and Pakistan

Upgrade of India's foreign currency ratings by Moody’s and S&P

What lies ahead…

It's always difficult to repeat an incredible performance, but if the Q2 GDP numbers are any indication, the good times on the Indian stock markets could extend further in 2004. The Indian economy is clearly booming on the back of better than expected monsoon, prompting the huge inflows of foreign portfolio investment into Indian equities. The Indian companies have made their mark globally, and continue to improve in terms of competitiveness and the quality of goods and services. The outsourcing story has expanded from software to other sectors such as auto ancillary and pharmaceuticals. Despite the setback to the disinvestment process due to legal wrangling, the Government remains committed to economic reforms. The world is now looking at India as one of the fastest growing economies along with China. Most financial institutions have upgraded Indian equities. FIIs continue to remain bullish on India and are expected to continue its buying frenzy in 2004 as well. After crossing 5900, the Sensex is looking set to top 8000 this year. The BJP-led coalition is expected to romp home in the upcoming general election, which would be a major boost to the economic reforms programme, especially to the disinvestment drive. Moreover, Indo-Pak peace process is firmly in place, creating the much-needed stability in the region. All in all, the new year would see the Indian markets scale new heights.