MUTUAL FUNDS

India well poised to achieve a GDP growth of 6.5-7% over next many years<
07-Jun-12   18:35 Hrs IST

Mr. Atul Kumar
1) What are the domestic factors that have lead to the volatility of equity markets during the last month?

On domestic front, the major events include the slowdown in economic growth with GDP dropping lower at 5.3% for the recent quarter. Many brokerage houses have also anticipated India's GDP forecasts for fiscal year 2013 to fall below 7%. Moreover, Inflation numbers remain stagnant not declining even with the base effect kicking in. As a result, there may not be a major reduction in interest rates.

Indian rupee depreciated 6.4% during May 2012 as concerns pertaining to financial crisis in Europe dominated global investors sentiments. With problems in Greece and other nations in the Eurozone, the volatility in currency and equity markets may continue for some time.

2) With GDP numbers dropping lower during the recent quarter? What are your advices for investors?

We remain optimistic about Indian equities in the long run. Even after brief the rally in year so far, we hope to see the equity valuations as reasonable. Irrespective of the global economic problems, we see India well poised to achieve a GDP growth of 6.5-7% over next many years. Investors can consider allocating higher to equities at this point of time for good returns in the long term.

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