Buoyant economy aided by healthy figures and good forecast is pushing stock market indices to heights unseen this year. Finance Minister Pranab Mukherjee’s announcement of maintaining fiscal stimulus until next Budget has benefited the cause no end.
The predictions are even more upbeat for the next fiscal year of 2010-11. The Planning Commission is hopeful of a better show than previous forecast – may be even getting back into the high-growth groove of the pre-recessive times.
It is indeed heartening to note that Indian economy is performing well beyond expectations, even with below-par monsoon and lower growth rates of economies in the western hemisphere, most importantly the US.
Despite these positive signs, the third quarter figures and the outcome of the Union Budget will play an important role in deciding the direction market takes next year. Plans are afoot to bring down the fiscal stimulus, introduced to overcome the effects of economic slowdown. The Reserve Bank of India is proposing steps to contain the high inflation rate, which is threatening to go out of control.
There are indications that the Union Budget, scheduled for presentation by February end, will be focusing on fiscal consolidation. Other measures are also on the cards to encourage investments in infrastructure, inclusive growth and reforms. The government is aiming for the elusive double-digit growth rate before the end of the present five-year plan.
On Christmas Eve, for the third straight day, the stock market rallied to a 19-month high, backed by strong liquidity and positive trends in economic and corporate growths. During 2009, both Sensex and Nifty posted amazing growth at 80% and 75% respectively.
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