Q2 GDP Likely To Be Around 4%: Experts

Mumbai, November 29: India's second-quarter GDP numbers are due to be released on Friday and it is expected to remain subdued where some experts say that it could be around 4 per cent which is near a decade low. 

The Central Statistics Office (CSO) under the Ministry of Statistics and Programme Implementation will release on Friday the data for the July-September quarter of 2019-20 financial year. 

Condition of the economy

On Wednesday, finance minister Nirmala Sitharaman, while giving reasons for the dip in GDP numbers, said in Rajya Sabha that the economy may have slowed down but there was no recession in the country. She also said that inflation was lower and the growth was higher under the present regime. 

Sitharaman informed the Upper House that the country’s real GDP growth was at 6.4 per cent at the end of 2009-2014 and 7.5 per cent during 2014-2019. This northward movement, according to Sitharaman, was due to the recapitalisation of banks.

Will there be a sixth consecutive fall?

According to Amit Gupta, Co-founder and CEO, TradingBells, “The markets have already factored in subdued GDP figures and is betting on more rate cuts as well as more stimulus measures for the economy by the government. It must be noted that Indian economy or GDP expanded at 5 per cent in the April-June quarter, the slowest rate since 2013.”

Earlier this week India Ratings, a Fitch Group company, predicted India’s GDP may have further slowed down in the July-September quarter to 4.7 per cent. If the GDP falls in Q2FY20 as well, then it will be the sixth consecutive quarterly fall. 

Indices at an all-time high

Equity market's headline indices the Nifty, Sensex and Banknifty all three are at an all-time high despite all worries related to growth. Current bullish momentum is driven by global cues as trade war tension between the US and China is easing off and global liquidity is chasing emerging markets. 

“Other than the global cues, the market is running on hope for more stimulus packages for the economy,” Gupta stated. He added that the market was a forward-looking animal where most of the negative news about the economy is factored in.

Lower GDP to affect market sentiment

Mustafa Nadeem, CEO, Epic Research, said that markets tend to discount everything in its price. So, a negative sentiment that may be due to GDP numbers would certainly put a dent on the market sentiments in the short term and may trigger some profit booking which is a usual phenomenon in any trend. 

“We believe market has formed a very solid base around 11,800-11,900. In its uptrend from 10,700, market has absorbed almost every aspect of bad news such as GDP numbers, its slowdown, rating agencies re-rating the India as an economy, Negative IIP numbers and so on,” Nadeem said. 

Markets defy signs of weakness

Markets have been able to hold the gains despite signs of weakness in the economy. Of late there have been a lot of negative news and much of that is absorbed in the last double digit returns move given by the indices. 

Nadeem states that it may have been concentrated to few stocks but the market is discounting the number of measures recently taken by the Indian government. These were banks’ recapitalisation, corporate tax rate cuts, infrastructure spending, real estate sector and auto sector aids.