SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
SUBMITTED TO: PROF. HEMA BINDU KOTA
BALJINDER SINGH 27113
NRIPENDRA SINGH 27067
NIKHIL VASU 27124
SHABAD KAPOOR 27007
SHILPA J 27074
SHRIKANT SHARMA 27134
VINIT GOGRI 27057
Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century. For over a century the United States has been the largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the US and the rich countries of Europe to the two Asian giants- India and China. According to some experts, the share of the US in world GDP is expected to fall (from 21 per cent to 18 per cent) and that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China. Indian Economy experienced a GDP growth of 9.4 percent during 2007-08. By 2025 the India's economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years. Macro Economic Developments
Industrial Growth and GDP:
Industrial growth released by CSO for the month of May 2008 stood at 3.8% (lowest in 6 years) compared to 11.6% growth recorded in the previous fiscal. The slowdown was mainly on account of manufacturing sector that recorded a 3.9% growth in May 2008 in contrast to 11.3 % recorded in the corresponding month of the previous year. The industrial growth for April 2008 was revised from 7% to 6.2% In the light of development taken place in the recent past, particularly the tightening of monetary policy by the RBI and incessant increase in the raw material prices including the prices of oil and oil products GDP growth is likely to moderate in the present fiscal. The GDP growth in the year 2008-09 was expected to be in the range of 7.5-8% In May 2008, growth in 4 of the 16 specific industry sectors was higher than the growth recorded in the same month of 2007. These 4 sectors included beverages & tobacco, wool, silk and man made fibre, paper and chemical products. Production of food, jute, wood, paper, rubber and metals products slipped in May this year compared to the same month of previous year.
Average inflation recorded during 2007-08 was 4.66% lower than the average inflation rate computed for 2006-07. In the year 2007-08 dearer food articles mainly contributed to high inflation. The government later imposed ban on few essential commodities and employed fiscal measures to check high inflation (caused due to manufactured items). Following the recent increase in the price of petroleum products, inflation crossed the double-digit level and is presently ruling at a high of 11.9 % for the week ending June 28 2008. Inflation at double-digit levels is likely to continue for the next few months before it starts receding following the recent fiscal and administrative measures taken by the government. The bumper agri production in 2007-08 and its repeat performance in 2008-09 will have a salutary impact on the food grain prices. As the year progresses we expect that average inflation for the year 2008-09 would be in the range of 8-8.5%. Inflation recorded from April-June (3rd week) 2007-08 averaged at 8.9% compared to 5.4% in...