Hail Q2 GDP, but it won't affect mkt far too much: Experts

India's economy grew a better-than-expected 4.8 percent for the quarter ended September, led by strengths in the agriculture and construction sectors. This, however, is the fourth successive quarter of economic growth below 5 percent.

Hallelujah!
Madan Sabnavis, Chief Economist, CARE Ratings says the 4.8 percent number is extremely encouraging given the subdued conditions owing to monsoons and a slowdown in infra activities, however, it is not enough to be inferred upon.
What will play a big role in driving India’s growth forward is a pick up in consumption and investment. “If the government does clear a number of infra projects in the third and fourth quarters, we could see something positive happening there,” says Sabnavis.
DK Joshi, senior director & chief economist, CRISIL, says the GDP number comes on expected lines. He expected the agriculture sector to do well and adds that the services growth, rather the lack of it, is highly disappointing.
“It was very clear that there are no drivers for growth right now, because neither fiscal policy nor monetary policy is able to support growth and on top of that the private investment climate has anyway vitiated,” he adds. How will the market react on Monday?
Manish Wadhawan, managing director and head of department-interest rates, HSBC says he’s glad that the Q2 GDP numbers are on expected lines so there's no surprise for the equity market.
Besides, he says for both bond and rate markets, other factors like the currency or liquidity, are far more important parameters. Wadhawan believes the rupee will be rangebound between 62 and 63 against the US dollar. So, how will the coming quarters pan out?
Joshi is pinning hopes for a robust H2FY14 and rural India has a lot to contribute to that, he says. “I think the second half is definitely going to see a further boost from agriculture, but that is one-time. The other thing which we should point out is that the rural wage is again seemed to be rising,” he explains while saying that the export growth is likely to be strong in H2FY14 as well.
For Q3, Joshi is betting on 4.9 percent and 5.1 percent in Q4FY14.
Sabanvis too expects a close-to 5 percent growth in Q3 and Q4.  “It is all based on the assumption that so-called festival and harvest money gets spent towards consumption and the investment takes off on account of the project implementation taking place. So, if these two assumptions are met we could probably be moving towards the 5 percent mark by the end of the year,” he highlights.
However, unlike other experts, Sabanvis expects the FY14 growth to have a downside risk and to come sub-4.9 percent.