The long term outlook continues to remain positive for Indian equities as the economic growth momentum remains healthy with real GDP growth remaining at around 5-7%. The policy outcome on the vote on FDI in retail is a keenly anticipated event for the markets.
Moreover, the deadlock in the US regarding policies on increasing taxes and on the looming fiscal cliff is also a key concern for the market. It remains to be seen how soon and in what way this deadlock will be resolved. It is highly likely that the worst quarter of GDP growth is now behind us. Growth should improve going forward. However the RBI continues to maintain its anti-inflationary stance. It appears that it will take another one to two quarters for inflation to dip, before which the repo rate cut may not be that forthcoming.