BSE may need to go down to 12000

BSE may need to go down to 12000, if anyone has to make money in Ind

Fri Mar 14, 2008 8:58 am (PDT)

India: Is the 8.7 per cent GDP growth forecast rosy?
Possibly so, and to reflect increased uncertainty the BSE Sensex may have to go down all the way to 12000, a level last seen in 2006 before any investor can think of making serious money.

The reason is simple: the aberration called by the Economists in IIP numbers may actually be a malaise. India's industrial output growth slumped to 5.3 percent in January from 11.6 percent a year earlier, dragged by a 3.1 percent contraction in the consumer goods sector, he said.

The pace of India's economic growth will ease to 8.7 percent in the fiscal year through March due primarily to a slowdown in consumer demand and the manufacturing sector, the country's finance minister said Friday.

That's down from expansion of 9.6 percent in the 2006-2007 fiscal year, India's fastest expansion in nearly two decades.

"Overall, there was a deceleration in the growth of public and private consumption, which affected the growth of the services sector, including construction, " Finance Minister P. Chidambaram said in India's Parliament on Friday.

The slower growth of consumer goods is also the most important factor in the slowdown of the manufacturing sector, he said.

India's industrial output growth slumped to 5.3 percent in January from 11.6 percent a year earlier, dragged by a 3.1 percent contraction in the consumer goods sector, he said.

In the booming services sector, trade, hotels, transport and communication activities were likely to expand 12.1 percent, compared to expansion of 11.8 percent the previous fiscal year, a government statement said last month.

Agriculture appeared to be growing at a much slower rate of 2.6 percent during the current financial year, down from 3.8 percent the previous year, the government said.

"The deceleration in growth in agriculture is attributed to a slackening in the growth of winter sown crops," Chidambaram said Friday.

There was a general slowdown in most sectors, not including electricity, hotels, transport and communications.

Posted by: "Maverick"