Looking closely at the Indian economy after 3 years of being away, a few points seem apparent:
- Runaway house prices
- Crazy inflation
- Weakening currency
- Rising interest rates
- Volatile stock indices (but trending downwards)
- Higher fuel prices
- Political crises
The above don't portend well for the Indian growth story (in the short to medium term). There may be some respite for the markets around the traditional Diwali holidays coming up towards the end of this month. However, if weaker than expected corporate results are reported for the quarter ended September 30, 2011 and / or there are negative world events things will get a lot worse.
I'd be bracing for:
- lower GDP growth rates - closer to 7% rather than the 7.8% being forecast currently
- weaker rupee - in the low to mid 50s against the USD
- higher non-performing asset declarations by the local banks for this financial year
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