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2007: Of high hopes... - Views on News from Equitymaster
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  • Jan 3, 2007

    2007: Of high hopes...

    The time for the crystal ball gazing has arrived. What to expect in 2007? Sitting in India, we suppose it is going to be a wonderful year (yet again!). With oil prices softening, markets delivering healthy returns and the businesses looking good in a long time, Indian economy is eyeing a double-digit growth.

    Last year has been the year of highs for the economy. India emerged as one of the most attractive investment destinations in the world. The Sensex has been growing at a CAGR of 42% for the last 4 years quadrupling to 13,708 by end of 2006 as against 3,377 points at the end of 2002. The kind of attention showered on the country by foreign investors of the institutional and private kind has been pleasing. Money is being raised in India and overseas to fund Indian enterprises for organic and inorganic growth. Going global has been the new mantra of corporate India. India Inc came of age in 2006.

    Lending this growth story greater credibility, combined with hopes of sustainability was the fact that unlike in the past where specific industrial sector drove the growth, this time around, action was seen across the sectors - from textile to telecom, pharma to steel and IT to aviation. There is a newfound confidence across the country. The chances of the Indian economy matching its Chinese counterpart on the growth front are high. The expectation is India will set sights on double digit growth over the next couple of years aided by lean manufacturing sector, and unrelenting services play, Rising investments will surely aid the growth process.

    For the coming year, the environment looks good. The acquisition spree will gain further momentum with medium sized companies also prowling in the international domain. The service sector growth would continue to be strong with manufacturing looking good. The retail sector would be definitely an area to watch.

    With the entry of Reliance and Bharti, expect the sector to hot up in this year. Global majors are also queuing up to enter India. The real majors will bring in the true meaning of customer service to people who have never savoured the benefits attached to the saying - "Customer is king." Sectors like FMCG, logistics and supply chain will piggyback their way to success on the retail story. There would be newfound confidence across the bigger corporates and the smallest cubicles.

    But even as India Inc. races ahead during 2007, besides its usual bottleneck regarding infrastructure, there would other worries too. One is to find the right kind of human resources to fire the strong growth both in domestic and global arena. Inflation, rising interest rates and political environment need to be checked too. However, in all fairness, India seems set to achieve greater heights. Let us hope it keeps its tryst with destiny in 2007.



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