In the midst of weakening macro fundamentals the cold winds of winter seem to have already hit the Indian economy, but spring may not be far behind as GDP growth and corporate earnings figures remain robust despite a slowdown, says Merrill Lynch.
"While the present weather is overcast and cold, the spring may not be far behind. Growth though slowing is certainly not collapsing. There is no structural breakdown in the economy," the global investment bank said in its latest equity strategy research note.
Moreover, a significant correction in commodity prices has eased the concern and inflation expectations seem to be peaking off. The industrial credit growth is still robust, despite positive real rates, while global growth is also not yet dead, the report stated.
Besides, valuations may not be compelling, but are still far from expensive territory. Further, the government has recognised the urgency for accelerated reforms and has indicated that it would want to move fast, it stated.
Merrill Lynch report said that despite the political and macro economic problems, the Indian economy has managed to chug along the high growth course.
Elaborating on the major concerns that have had an impact during the 1992-2008 period, it said the Indian economy has gone through two gulf wars, world economic sanctions post nuclear test, extreme political instability, kargil war, global recession (mid nineties and early 2,000s), two major securities scam, at least two major droughts, inflation in high double-digits and interest rates in high teens.