Dhirendra Talk Marketing

Sound dynamics puts India on solid footing February 9, 2009

Good morning friends. India comes out moderately fine on all parameters”.  And it is not that badly placed.  

Till January last year, ‘decoupling’ was supposed to be the magic mantra that would insulate India from any possible global slowdown. But that theory has been long forgotten, to the extent that market watchers may even have trouble spelling it. 

Deleveraging and deglobalisation is the new buzzword, with painful consequences for India as well. Yet, India appears better poised to recover from the ongoing carnage in financial markets across the world, according to Uday Kotak, vice-chairman and MD, Kotak Mahindra Bank. 

While the panelists analysed various aspects of the market in great detail, Mr Kotak provided a big macro picture. It was not a pretty picture. “The world is experiencing a retreat from globalisation in three areas: capital flow, trade and movement of people.”  That was the consensus at the World Economic Forum at Davos, the annual jamboree of CEOs and bankers.

“To my mind, there are three criteria for deciding which economy will emerge from the crisis first,” he said in his keynote address at the panel discussion ‘Equity Outlook 2009’ hosted by ET NOW.

India is not that badly placed. “Number one, the country must have a sound banking and financial system, and it should not have been affected in this process. Number two, very significant domestic consumption. And number three, significant and efficient domestic production. India comes out relatively fine on all three parameters”.

According to Mr Kotak, the only worry, would be the efficiency of domestic production as imports get cheaper, especially from countries, including China.  “India already has a sound banking system and significant domestic consumption. If you consider China, it has a sound banking system, and significant domestic production. But much of its consumption economy is more export-oriented and less domestic. So, China will have to shift towards more of domestic consumption and less of export dependence”. 

Mr Kotak opined that while India would be among the economies to recover early, it will feel the pain arising out of deglobalisation. “The markets will face pain in the short run, but will recover, before the real economy recovers. The hope is that in the real economy, by the end of 2009, India should be on way to a wonderful —maybe, wonderful is an exaggeration — perhaps, to a much better 2010,” he said.  Mr Kotak said the market was likely to be range-bound this year, rather than giving a clear direction of a bull market or a bear market at this stage.

“I genuinely believe that the India story is going to get stronger through this period of pain. It is a question of patience. And I firmly remain committed to India story over the long haul, which is significantly superior to almost any of the story of the world,” he said, in his concluding remarks. 

Refrence:  economictimes