Ms. Radhika Rao, India Economist, DBS Bank on GDP numbers

India's growth outpaced its regional peers, including China, in the last quarter of 2017. Positive set of real GDP growth numbers for Q3 FY18 - strongest in more than a year, boosted also by an upward revision in Q2. Base effects have also been favourable in Q3-Q4, depressed last year by the currency ban.

Improvement was broad-based, with a pick up in most production / investment demand indicators. Under GVA, agri and non-agri activities have both picked pace. Besides base effects, Better construction and agri sectoral performance bodes well for employment creation prospects. Looking ahead, the likelihood of higher rural incomes (on higher MSPs) and pre-election spending is likely to be supportive of FY19 numbers.

Encouraging growth numbers will help take some pressure of other weaker macro-indicators, particularly a wider CAD, fiscal and inflation outlook.

For the debt markets, however, relief might be short-lived as a strong growth picture lowers the bar for the RBI to shift from a neutral to a hawkish gear, should inflation prove sticky beyond June.

Source : Equity Bulls

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