Rating agency Moody’s had said that India’s market outlook for this year will depend on consumption demands, corporate earnings and inflation trends. While maintaining that it expects the country to be the world’s fastest growing major economy this year, it expects that the market trends will depend on whether inflation remains under control and corporate profits revive.
Moody’s further stated that “India enters 2016 on the cusp of a cyclical growth recovery, with inflation under control and the economy benefiting from lower commodity prices.” Notifying that these reasons place the country at an advantage relative to many similarly rated emerging market peers, Moody’s said that it believes that these advantages will only yield sustainable growth acceleration once corporate and bank balance sheets are repaired, and if the private sector remains internationally competitive.
Additionally, Moody’s said that inflation and corporate profit trends will offer clues as to whether these efforts have created conditions for growth that are sustainable over the next three to four years. While quoting a projection of a boost in consumption following the pay revision for Central government employees and pensioners and a potential upturn in farm, which is expected to boost rural demand, it said that a broad based pick up in investment will only unfold with a lag.