Fundamentals Look Strong

The ripple effects of financial turmoil in US have no doubt been felt in India. The Sensex hovering close to 9800 and hitting year lows, there is a sense of uncertainty in the minds of the investors. It makes me laugh when I hear people say that Euopean Banks are going to crash. Logic has to kick in somewhere and for a few it does kick in very very late. But is the India story really come to a standstill?

The fundamentals suggest otherwise. One of the indicators of this is the unemployment numbers. US posted unemployment at 6.1% which might go up to 10% over the next year. This would result in 6 million Americans losing their jobs. But India is relatively stable so far in this context. Though the IT companies at large have laid off employees, the other sectors have been conservative in not letting go of the talent pool. The new hire rate has been kept low and many Indian companies are hiring employees from US or transferring them to Asian operations. Apart from this the companies in India have been posting strong numbers. This is a good sign. The figures suggested by Global Insight for a GDP growth rate of 8.5% are unrealistic right now. I am hopeful that the country will hit a 7.5% mark this year.