Given the current infrastructure deficit and above 90% capacity utilization ratios in many key industries, we expect the rapid pace of investment to continue into 2008. Consumption has slowed due to interest rate tightening, favorable demographics, increasing penetration of retail credit and untapped rural potential indicate the consumption story is still alive. India has potential to further lift its trend growth level and remain one of the fastest-growing economies in the region. But moving to a higher growth trajectory entails addressing a number of challenges.
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HSBC, One of the Major Investors in the current Rally said,
One of the major themes in 2008 will be corporate earnings. Companies will be reporting their annual numbers for FY2008e in April and May 2008. Consensus forecast for FY2008e Sensex EPS growth is 20.5%. From 708 in FY2007, Sensex EPS is expected to grow to 1,226 in F2010e according to consensus. This is a CAGR of 20.1% over three years. Read On [PDF]
Lehman Brothers writes,
The bigger macro story, to us, is Indias rising potential growth rate. India is exhibiting many of the characteristics that Japan, Korea and China did during their economic takeoffs. Read On [PDF]
Macquarie Research adds,
India will be in a “sweet spot” in 2008, with domestic growth bolstered by capital flows even as the US slows without slipping into recession. We explore the key themes that we think will dominate 2008. Read On [PDF]