While macro-economic parameters of Indian economy seem robust, given the way it is projected by the stock exchange, it is still hard to perceive if the economy is actually doing well. A correct picture can be ascertained by looking at the positives and negatives that make for real time values.
Positives: In 31/2 years of BJP rule, what strikes the most is various stocks in the Indian market which have shown tremendous growth. However it would not be wrong to say that the earnings per share of companies that have done well have not necessarily doubled, casting aspersions on the intrinsic value of the shares in question. To quote examples of stocks that have outperformed are MRF and Eicher Motors. In the public sector, too, we have good performances from oil refining companies such as IOC, HPCL and BPCL, much in tune with lower crude oil prices which have made these oil refineries very competitive much unlike ONGC, which lost out because of the fall in crude oil prices. Looking at impressive stock valuations, one may be tempted to believe that the economy is sound, but these figures seem to be a little inflated. Pharma companies however have not performed well, more because the USFDA downgraded many of these companies.
Negatives: Private power company owned by Adanis in Mundra has accumulated losses of Rs. 49,000 cr - government had bailed out Adanis by transferring ownership on to the state government, a big burden on finances of Gujarat government. Another is the ailing Air India, which has accumulated losses of Rs. 40,000 cr and is awaiting privatization. Also the declining GDP which at 5.7, the lowest for quite a few quarters now. Another cause for concern is the recent announcement by the FM that a stimulus package of Rs. 50,000 cr is being lined to push up the economy. Where is the need for stimulus package now when interest rates of banks are very low at 6.5%.
Elvidio Miranda, via email
Positives: In 31/2 years of BJP rule, what strikes the most is various stocks in the Indian market which have shown tremendous growth. However it would not be wrong to say that the earnings per share of companies that have done well have not necessarily doubled, casting aspersions on the intrinsic value of the shares in question. To quote examples of stocks that have outperformed are MRF and Eicher Motors. In the public sector, too, we have good performances from oil refining companies such as IOC, HPCL and BPCL, much in tune with lower crude oil prices which have made these oil refineries very competitive much unlike ONGC, which lost out because of the fall in crude oil prices. Looking at impressive stock valuations, one may be tempted to believe that the economy is sound, but these figures seem to be a little inflated. Pharma companies however have not performed well, more because the USFDA downgraded many of these companies.
Negatives: Private power company owned by Adanis in Mundra has accumulated losses of Rs. 49,000 cr - government had bailed out Adanis by transferring ownership on to the state government, a big burden on finances of Gujarat government. Another is the ailing Air India, which has accumulated losses of Rs. 40,000 cr and is awaiting privatization. Also the declining GDP which at 5.7, the lowest for quite a few quarters now. Another cause for concern is the recent announcement by the FM that a stimulus package of Rs. 50,000 cr is being lined to push up the economy. Where is the need for stimulus package now when interest rates of banks are very low at 6.5%.
Elvidio Miranda, via email
