India Inc: all may not be well, but growth story is still intact

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fructifies to tame inflation and if the crop procurement remains high post the monsoons (as expected), we might see some lenient measures by the apex bank lending a helping a hand to the industry”.

Stock markets, which works on presumption that it will reflect long-term fundamentals, were quick to respond to the earnings posted by the companies. On the industry specific level, interest rate sensitive sectors such as banking, auto, real estate have come under the scanner of the fund managers mainly on the back of fear of hike in the interest rates by the RBI and write offs by the banks due to over exposure to the forex derivatives products.

Amidst all the uncertainty in the local and global economy, the mandate passed to the companies by the Institute of chattered accountants of India (ICAI) to disclose losses due to derivatives exposure (foreign currency and commodities) from April 1, 2008 came as a surprise to the Indian corporate sector. Though some banks came out with write offs and provisioning to the derivatives exposure in the Q4 numbers markets didn't react to the news in a huge way and experts believe that the issue has already been factored.

Alpesh Shah, a chartered accountant with a leading firm said, “It’s too early to estimate the exact quantum of such losses for corporate India as some firms have taken the legal route. As the situation improves, the mark-to- market (MTM) losses may be trimmed down. However, we do not see this to be a widespread phenomenon that will impact across-the-board earnings.”

However experts believe that sectors like FMCG and telecom having a high dependence on local consumption and other sectors such as IT, pharmaceutical and capital goods would offer good returns in the medium to long term.

In the context of the stock markets, participation by the global players still remains a matter of concern but with improving conditions in the US and receding commodities prices, experts believe that India will still remain one of the fastest growing economies thus attracting foreign funds to the Indian markets.