The tumultuous month of Sept is now behind us, and there are a lot of interesting developments which have occurred in the recent times. Global concerns have never been so visible in the recent past, and with bounties of concerns over China, sovereign downgrades of countries like Brazil etc, Currency crisis etc. Along with it the FED maintaining status quo and the RBI cutting rates despite a 14% deficiency in the monsoon it is quite evident that slowing global growth is uppermost in the mind of central bankers.
However, India by far is best placed in the present down-cycle which has engulfed most emerging economies. The early Diwali surprise by the RBI governor would definitely trigger a lot of positive momentum across the corporate industry over the medium term. Coupled with Cooling Oil and Commodity prices and lower subsidies and higher indirect tax revenues should in our view enable the GOI to meet its fiscal deficit target for this fiscal despite measures like OROP.
The month of September has witnessed FII unwinding in most emerging markets and India cannot be isolated or de-coupled from the slowdown in the global economy. Post this sell-off we remain constructive on Indian Equities as India remains one of the few economies in the globe which can grow at 7.5%.