The gross domestic product (GDP) for Q3 FY14 came in at 4.7 percent, up from its Q3 FY13 growth of 4.4 percent (YoY), but down from it previous quarter growth of 4.8 percent. A CNBC-TV18 poll had expected the growth to be around 4.8 percent.The Central Statistics Office (CSO) had estimated a growth of 4.9 percent.The agricultural sector grew at only 3.6% versus 4.6% quarter-on-quarter. The manufacturing growth saw a negative trend coming in at - 1.9% versus 1% quarter-on-quarter.
The mining sector too reflected the slowdown growing by -1.6 percent versus -2 percent (YoY). Electricity, gas and water supply grew at 5 percent versus 7.7 percent Data services, meanwhile grew by 7.6 percent, up 1 percent on a year-on-year basis while trade, hotels, trans growth, that represent the unorganised sector, came in at 4.3 percent versus 5.9 percent (YoY).
A GDP growth of 4.9 percent for FY13, as targeted by the CSO, now seems more and more unlikely.
Is Indian growth still in a trough?
While the growth numbers are likely to be revised going ahead, the entire GDP growth seems to be supported bu the huge jump seen in the finance component of the GDP, says Samiran Chakrabarty, head of research, Standard Chartered Bank.
Chakrabarty further adds, “A complete disconnect between the real sector growth and the financial sector growth cannot be sustained for very long.”
“The 4.9 percent GDP growth that is the estimate of the government is going to be seriously in doubt with manufacturing being almost flat. Just services cannot lift these numbers beyond a point and financial services having done its best in the Q3. So, in Q4 we cannot expect that they will also give a sterling performance,” explains UR Bhat, managing director, Dalton Capital Advisors.
How will yields behave on Monday?
Manoj Rane, managing director and head fixed income & treasury - India, BNP Paribas says yields won’t be impacted too much as the GDP numbers were pretty much in-line with expectations.
GDP at 4.9 percent?
Chakrabarty maintains his 4.8 percent GDP estimates, but with a downward bias. “The first two quarters GDP numbers are going to get revised. So, let us see how it pans out.”
Bhat too believes the 4.9 percent growth is in doubt. “It will probably be somewhere in 4.6-4.7 percent range. In the last five quarters we have got sub-5 percent growth which does not seem to suggest even on the ground level that next year’s GDP growth is going to be dramatically higher and from the market view point whether this will result in huge earnings growth for companies that is very unlikely.”
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