India Inc shows growth spreading by end of Modi’s sophomore year | Reuters

Indian companies are posting their best earnings results since Prime Minister Narendra Modi swept to power two years ago, giving the clearest sign yet that India’s fast, but patchy, economic growth is becoming more broad-based.

Though headline growth figures make India one of the world’s fastest growing economies, weak private investment and low capacity utilization rates have painted a less rosy picture.

Going by India Inc’s surge in profit growth in the first three months of the year, however, the outlook really does seem to be brightening, as benefits feed through from lower interest rates and government spending in infrastructure and defense.

On Tuesday, India will release gross domestic product data for the January-March quarter. Year-on-year growth of 7.5 percent is forecast by a Reuters survey economists, slightly faster than the previous quarter’s 7.3 percent.

“Macro indicators are suggesting that at the ground level the economy is gaining momentum,” said Dhiraj Sachdev, a fund manager at HSBC Asset Management in Mumbai.

“That has also been validated in terms of better corporate earnings in many of the sectors.”

Operating profits for 289 companies that have reported results so far leapt 25.5 percent year-on-year in the March quarter, compared with 1.7 percent growth in the previous quarter, according to Thomson Reuters data.

It is Indian firms’ best showing since the April-June quarter in 2014.

Put alongside the 6.8 percent decline in earnings that data provider Factset reckons companies in the S&P 500 suffered during the same quarter, India’s corporates have some things going in their favor.

India’s broader National Stock Exchange share index .NSEI has surged around 17 percent from a near 2-year low on Feb. 29, outperforming a 7 percent gain by the Asia-Pacific MSCI index excluding Japan .MIAPJ0000PUS.

This week, Morgan Stanley upgraded Indian equities to “overweight” from “equalweight” citing rising dividends, and prospects of a simpler country-wide sales tax, lower interest rates and benign monsoon among its reasons.

Source: India Inc shows growth spreading by end of Modi’s sophomore year | Reuters

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One Comment to “India Inc shows growth spreading by end of Modi’s sophomore year | Reuters”

  1. India Inc shows growth spreading by end of Modi’s sophomore year | Reuters

    I have read the above news with interest and with some joy that the economy is gathering momentum.

    In the news piece, various indicators and studies by pundits conclude that things are looking up!

    This must be a matter of some satisfaction to Prime Minister Modi and his Government, who have just completed two years in office.

    Like

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