India Inc optimistic of growth outlook despite margin squeeze – Economic Times

Posted on February 16, 2011 by

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MUMBAI: Indian companies remain optimistic about the business outlook despite the squeeze in profit margins , because sales growth is still strong, said Nirmal Jain , chairman, India Infoline . He was speaking on the sidelines of the firm’s second global investor conference, which would be attended by 500 global fund managers and 90 companies.

“In our interaction with companies and investors, the feedback we are getting is that there is still a lot of interest in India, contrary to a perception that it is waning,” said Jain.

ICICI Bank, HDFC, Axis Bank and Educomp Solutions, among others, were the companies, which interacted with investors on the first of the three-day event on Tuesday. Jain doesn’t rule out another 5-8% correction in the market in the near term in wake of the corruption scandals involving companies.

“Corruption can get murkier and you may hear stories of new involvement, which can have a psychological impact on investors,” he said. “But such instances will be good opportunities for investors to bet on India in the long term.”

Jain said some global funds, which were buyers during the start of the rally in March 2009, have booked profits, of late. But new foreign investors are looking at Indian stocks after the recent correction.

Companies officials, who participated in the event, cited high commodity prices, strong interest rates, tighter liquidity, and currency fluctuations as the key challenges to India’s growth.

Jim Walker, managing director of Asianomics, who was one of the speakers in the conference, said, “I expect the global economy to face renewed challenges over the course of this year as developed economies’ growth slows and China tightens monetary policy. These factors will drive commodity prices lower, which is a very favourable scenario for India,” he added.

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Posted in: India