India's fourth quarter 2012 GDP growth of 5.3 percent sent shockers to the global investors which led to series of downgrades in expected 2013 GDP growth by leading global investments banks.
Morgan Stanley has cut its 2012 economic growth estimates to 5.7 per cent from 6.3 per cent, after already downgrading its forecasts about two weeks ago from an initial estimate of 6.9 per cent growth.
Standard Chartered Bank cut its financial year 2013 gross domestic product (GDP) forecast to 6.2 per cent from 7.1 per cent while CLSA said it “will probably” lower its consensus GDP forecast of 6.3 per cent to around six per cent.
InvestorZclub believes that there is increased chance of another rate cut of 25 bps to 50 bps in next RBI meet in spite of inflation being in un-comfort zone. The inflation in India is mainly due to supply side bottlenecks which can hardly be controlled by keeping rates high. A 50 bps points cut in interest rate will not feed into inflation too much but could be a big confidence booster for investors which would lead to increased inflows and could fix our current account deficit.
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