Ambit Capital Research expects India GDP growth of 6.8% YoY in FY14 vs the CSO's initial estimate of 5% in FY13.
Consumption Cycle Begins - History suggests that the early phase of an economic recovery is characterised by a pick up in the consumption of non-durable items and is ‘followed’ by a pick up in durables consumption. Given that non-durables demand has already turned around and given the likely pick up in farm sector growth and Government expenditure, consumption growth in FY14 is likely to pick up.
Government Spending - The Union Budget for FY14 budgets a 350bps increase in revenue expenditure growth in FY14.
Rate Cuts - Expect improved capital availability conditions driven by repo rate cuts (of another 75bps, in our view) and by improved equity market conditions to provide an impetus to private sector replacement investment demand in FY14.
They have a SENSEX Target of 23,000 for FY 2014 i.e by March 2014
