The National Statistical Office (NSO) released the estimates of National Income for the first quarter (April-June) of the current fiscal year (2022-2023) on Wednesday evening. A lot has already been written, said and debated about the reported GDP/GVA numbers. Apparently, the reported yoy GDP growth of 13.5% for 1QFY23 is slightly short of what the market consensus was expecting.
In my view, the economic growth of India has been grossly inadequate and unbalanced, especially in the past 5yrs. The worst part is that the manufacturing and construction sectors that are traditionally considered having material employment generation potential are growing the least. It is primarily the exports that have helped the Indian economy to grow at the rate of 1.4% CAGR in the past 3years. Given that the global economy has perhaps entered a phase of protracted slowdown or sub-optimal growth, the exports may not sustain the Indian economy for too long.
The markets must take cognizance of this. Especially the excitement in construction and capex space is not getting much support from the economic data sustain. Moreover, the piling inventories across supply chains globally and in India at a time when demand is getting crushed and inventory carrying costs are rising, also call for additional caution.
Technically markets are showing some strength and may move a little higher from the current levels. However, this would be a rally to sell into rather than getting infected with FOMO.
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