Sub 7% on GDP could come as jolt

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 We may get 7% plus number on the GDP but it would be unwise to celebrate because because I suspect for many quarters we will not see any close to 7%. So market participants would want the comfort of at least one last good number before it turns really ugly and to that extent anything sub 7% might come as a bit of jolt.

On GDP

It is an important number but, I think it's the last of the good numbers. So we may get a 7% plus number today but it would be in my view unwise to start celebrating that we have got 7% growth still going because I suspect for many quarters we will not see any close to 7% from there on and the markets typically look forward they don't look back. There is view which says we have to just scramble and get to that 7% figure today because everybody has been talking about it and so you got 7.9% in Q1 and you get 7.1-7.2%% in Q2 and therefore the performance of the first half will sort of bail you out and we will still get 7% but that is not what stock market is about; just scramble and post one number for the numbers sake.

What is the stock market worried about? It is worried about what happens in the current quarter, in the next quarter and what happens in the next 4-5 quarters and then you know that 7% is being extremely wishful. So you don't want to look back, you don't want to celebrate that you got a 7% recorded number today. The problem would be if we don't get a 7% today and if we get 6.9% then I think the market might sell off quite a bit because then I think the realty of even 7% being a very distant dream for the current year which I think is possible will be presented to investors.

So as long as we get 7% and bit more, we will be okay in terms of immediate reaction but that doesn't matter very much, it's like the inflation numbers. We have got to look ahead and when you look ahead one knows what the October,-December quarter will be like in terms of GDP, and we will be lucky to do 5% plus.

Do you think 6.9% would be a shocker; the market participants are far more circumspect about the figure than the government has?

In terms of just the current reaction it might surprise people. At least for this quarter they don't expect to see such a bad number, they know the real bad quarter is coming in October-December and it will be nowhere close to 7% maybe not even close to 6%. So they want the comfort of at least one last good number beofore it turns really ugly and to that extent anything sub 7% might come as a bit of jolt.