India Still Faces Economic Fundamental Hurdles

Euphoria surrounding India’s new government and strong economic data continues to power stocks higher, but some analysts warn the nation’s economic fundamentals don’t support further gains.
“This might be as good as it gets for some time,” said Shilan Shah, an economist at Capital Economics, noting India’s second quarter growth data was welcome news.

Gross domestic product (GDP) grew 5.7 percent on-year in the second quarter, data released last week showed, up from 4.6 percent in the previous quarter and the fastest pace since the first quarter of 2012. Meanwhile India’s balance of payments was in surplus for a third consecutive quarter, data showed on Tuesday.

Excitement over the promise of Prime Minister Narendra Modi who came into power in May coupled with improving economic data is pushing Indian stocks higher.

The Sensex and Nifty surged to fresh record highs on Tuesday. Both indices are up 27 percent year to date, making India’s stock market Asia’s best performing in dollar terms this year, but whether stocks can sustain their rise is questionable.

via CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza