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India On Goldman Sachs’ Investment Radar

January 22, 2015 | About:

Indian economy is all likely to see a major boost in 2015 as Goldman Sachs (NYSE:GS) is contemplating a big investment in Indian business scene, in line with other bigwigs such as Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) who has reconsidered their positive outlook for the Indian markets and expecting 15% upside in 2015.

India Retrospection and Speculation

In all likelihood, the 2014’s success story will continue in 2015 and analysts worldwide have set a 30% benchmark of growth for the subcontinent, but they are hoping for 15 % as the worst case, as hinted at by Timothy Moe, Chief Asia Pacific Strategist, Goldman Sachs.

In the long haul until 2016, the organisation is hoping for the same earnings growth and the expectation seems pretty legit as there will be cyclical recovery from a depressed level in India. After enjoying a humungous success in Taiwan, China and Indonesia, it is the turn of India now.

As per the report of Economic Times, the leading market intermediaries like Citi, Morgan Stanley, UBS (UBS.D) and Ambit Capital (AMBI) have revealed their expectation about benchmark index, BSE Sensex to reach the levels between 32,500 and 36,000 by December 2015. Moe adds that India will clock phenomenal growth of around 7% rate in the next year itself and throw the other emerging market economies out of gear. For example, India is up by 30% in US dollar terms and Korea is down by 10% which hints at a wide inequality between the markets and sectors. The market disparity created deeper dents which indicate at 40% point difference between the best and worst performing markets. In India, it is still reasonable to expect the growth figure rise from 5.6% to 6.3% in the coming two years. That is to say, India’s monetary environment is favourable and co-operative.

However, it might face a little struggle as US is likely to tweak its former policy rate in the third quarter of next year in the Federal Open Market Committee (FOMC) meeting on September 17th this year. Despite the hiked financial rates, it won’t pop up red herrings in Indian market, expects Moe.

Goldman Sachs Driving India’s GDP growth

Goldman Sachs believes that India will overtake China to become the fastest growing emerging market during 2016-18.

India is on a new growth cycle as believed by the Goldman Sachs India managing director and Chief India economist Timothy Moe. It is also believed that the macro imbalances, favorable global conditions and structural reforms have set the growth cycle on a roll in the subcontinent. The Asia Pacific research institute suggested that the Indian economy will undergo repairs and yield as much as 13% returns by the end of 2015, thereby causing a major boost to India’s Gross Domestic Product (GDP) by 6.3%. India’s GDP growth will be a role model for China in the coming years as it is fated to face a major slowdown.

Goldman Sachs forecasts cyclical recovery in the Indian economy as the government is looking at easing investment conditions in India stressing on project clearances. Plus, there will be a lot of FDI rushing into India as a result of liberalising the defence, insurance and construction sectors.

Moe also believes that the Indian Prime Minister Narendra Modi’s foreign trips will result in close of $36 billion of FDI in the next calendar year. Given the money inflow of $3 billion in FDI, it will break all past financial records in India. With foreign institutional investors pouring $20 billion into Indian equities, the result will be $16 billion thus far.


There are also hopes that the Indian rupee will be perennially stable against the US dollar due to the capital inflows. So, India will not heed the hiked rates by US Federal Reserve next year and see humungous success next year. Also, Indian currency vows to appreciate strongly against other developed market currencies such as the euro and the British pound. This calls for investors to create cash reserves to step up stakes in Goldman Sachs just before it makes an entry in the Indian market and reap the benefit of the rapidly growing Indian Economy.

About the author:

We are a group of analysts exploring and analyzing different domains of business and writing reviews based on information available in public domain web portals. We do not hold any stock or investment position in any of the companies that we write for.

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