Recent data, including some better-than-expected corporate results in the three months ended 30 September, may indicate that the economy is turning the corner, say economists. Meanwhile, the government’s huge bank recapitalisation drive is boosting investor sentiment.
The two — the second was announced only on Tuesday — are dispelling the sense of gloom that set in after economic growth decelerated to 5.7% in the quarter to June — the slowest pace in three years.
On Thursday, the BSE’s benchmark Sensex extended the lifetime high it hit the previous day, gaining 0.32% to 33,147.13 points.
Hindustan Unilever Ltd (HUL), India’s biggest maker of packaged consumer goods and a good measure for consumption demand in the economy, beat analysts’ expectations on Wednesday, reporting a 16.42% increase in net profit for the September quarter on the back of a 4% increase in sales volume. HDFC Bank Ltd, Kotak Mahindra Bank Ltd and Axis Bank Ltd, cement maker ACC Ltd, metals producer Hindustan Zinc Ltd and software exporters like Infosys Ltd have also reported robust second-quarter growth, reinforcing confidence that the growth momentum is accelerating.
More macro data, including that showing a cooling of inflation, and a rebound in exports and factory output suggest a favourable shift in the economy, recovering from the disruption caused by the rollout of the Goods and Services Tax and last November’s demonetisation of high-value banknotes.
The National Democratic Alliance government, which on Tuesday announced a Rs 6.92 trillion of investment for the construction of roads and a Rs 2.11 trillion recapitalisation package for state-run banks weighed down by bad loans, has been under pressure to boost economic growth and create more jobs ahead of crucial state elections, including in Prime Minister Narendra Modi’s home state of Gujarat, and national polls in 2019