Goldman Sachs' rosy India forecasts cheers investors

Global financial major Goldman Sachs today came out with a positive outlook for India saying the economy is likely to grow by 6.5 per cent in 2013 within days of Moody's giving a stable outlook on the country's sovereign rating.

This cheered investors sending the BSE Sensex to a 19-month high of 19,170.91 making them richer by Rs 80,000 crore in a single day.

The country's GDP is likely to grow by 6.5 per cent in 2013 driven by favourable external demand outlook and domestic structural reforms push, a Goldman Sachs report said today.

According to a research note by the investment banking major, growth is likely to pick up gradually to 6.5 per cent in 2013 and further to 7.2 per cent in 2014.
This is on the back of "easing financial conditions, in part driven by some reduction in policy rates, a continuation of reforms boosting confidence, and a normal agricultural crop," Goldman Sachs said.

India had been growing around 8-9 per cent before the global financial meltdown of 2008. The growth rate in 2011-12 slipped to a nine-year low of 6.5 per cent and in the first quarter ended June 30, the economy grew by 5.5 per cent.

The second quarter GDP numbers will be released tomorrow. On November 24, Finance Minister P Chidambaram in Pune had indicated that growth of the economy may have slowed to 5.5 per cent in July-September quarter of the current fiscal from 6.9 per cent in the year-ago period.
The US-based financial major also said India's S&P CNX Nifty Index may climb about 14 per cent by the end of next year and upgrading its recommendation on the Indian stocks to 'overweight' from 'market-weight'.

The 50-share Nifty could rise to 6,600 by December 2013, Goldman Sachs said. "For India, the upside drivers include a recovery in growth, a decline in inflation, and the potential for continued policy reforms," Goldman Sachs said. There was no year-end target mentioned for BSE Sensex.

Tracking a steep rise in local stocks, the rupee sharply appreciated by 61 paise, its biggest gain in two months, to end at 54.84 helped by capital inflows worth nearly USD 300 million and sustained dollar sales.