Markets, GDP Growth Won’t Recover In A Hurry, Ashmore’s Ashwini Agarwal Says

India’s market and gross domestic product growth will recover, but not in a hurry.

That’s according to Ashmore Investment Management India’s Ashwini Agarwal, who said the market is hoping for a few more “goodies” from the government over the corporate tax cuts announced in September.

“Can the GDP growth go back to 5 percent? Possibly. Will it go back to 7 percent over the next two quarters? Seems unlikely,” the partner at the fund manager said in a conversation with BloombergQuint.

Agarwal’s comment comes days after India’s GDP growth fell to its lowest in six-and-a-half years, to 4.5 percent in the second quarter of 2019-20.

While the tax cuts and government’s move towards privatisation are positives, GDP growth—and with it the markets—will take some time to recover. “None of the growth drivers—government spending, investment, consumption—seem to be firing at this point and there seems to be no apparent reason why one of these will start to fire in the apparent future.”

Also Read: The Case for QE in India Is Getting Stronger

Other Highlights

• Markets have risen since September when the government announced the corporate tax cut.
• Private sector investment demand won’t take off in a hurry.
• Delayed and unusual monsoon season had a huge impact on the market.
• More confident about sequential improvement, not year-on-year improvement.
• PSU pack trades at discounts to current levels and have strong fundamentals.
• In telecom sector, companies with greatest financial leverage will survive.
• Challenge in telecom companies continues to be on balance sheet side.

WATCH | Ashmore Investment’s Ashwini Agarwal On Markets And Economy