India is set to join the elite club of economies in the world. Indian economy would grow to $2 trillion. There are only seven other countries in the world which are having economy over $2 trillion and they are USA, Japan, Germany, China, UK, France and Italy. As per the recent budget, indian economy would cross $2 trillion by March 2012. As per the budget, Indian economy is expected to grow at 8.75 per cent to 9.5 per cent. India is also expected to outpace China in being the world’s fastest growing nation.
So what does that mean for stock market? Indian growth story is result of its population and their consumption. In the last few years, Indian economy has been growing consistently around a rate of 8 per cent. It initially started with growth in the urban economical centre but gradually it expanded to the smaller cities. With the increased penetration, more and more people are getting benefit and consumption has been growing up. Most of the sectors are beneficiaries of this growth.
Their earnings are consistently increasing. This lead to the industrial development and creation of jobs for educated class. Now this growth story is further expanding to rural India. Though, penetration is still low and the expansion pace is not very fast but it doesn’t provide a huge space for the growth in future. Better economy will bring more people under the umbrella of economical growth and this will take the company’s earning.
It is very important to figure out the sectors which are getting most of it. For example, auto, pharmaceutical and health care industry. They have growing rapidly and auto companies are consistely posting greater sales numbers. They are not able to satisfy the demand and there are long waiting period for most of the successful models. This is a mere example of how a sector can gain from economical boom.
And this is the case with most of the sector which are directly related to the mass consumption by the people. It should not be hard enough to figure out the good companies in these sectors and invest in them.
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