Do Global investors feel secure over Indian economy growth

Friday, September 17, 2010

Do Global investors feel secure over Indian economy growth

Indian economy is scripting yet another economy growth story, and global investors have every reason to feel happy about it.

When global economy is reeling under some serious crisis, Indian economy is pulling things up, which could be one reason, why Global investors are keen to invest in Indian stocks.

Indian Finance minister has gone a step further and predicts a 9% growth for the Indian economy, in the upcoming fiscal.

Foreign investors who invested earlier this year benefits as the current fiscal had seen a growth of 8.8% in the first quarter.

How come Indian economy has witnessed a growth of this magnitude when economy in Europe is reeling under debt? The US markets are not even near the radar of economic growth, while Indian economic scene has shown some very positive scenes.

United Kingdom’s secretary of state for business, innovation and skills, Vincent Cable had predicted that Indian economy size would be the size of combined German, Britain and France economy by the year 2040.

If you look at the first 6 months of 2010, then there’s contrasting economic trends from the same period last year. The global investors have purchased bonds close to $10 billion this year while, during the year 2009, foreign investors sold close to a total of $1 billion.

Still, in spite of the talk of big economic growth in the Indian stock market, there are few apprehensions that nag global investors.

Firstly, the inflation in the Indian market scene has increased considerably and could rise as high as close to 11%.

Secondly, the higher valuation of Indian equity is another concern for Global investors.

Though, there could be few hitches on the way, yet, Indian equity market has very low risks, and, therefore, a safe haven for foreign investors.

Finally, global investors should take a cue from the fact that Indian economy largely depends on domestic trades, which helps in minimizing the risks.

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