Fearful Symmetry sees a slow Indian recovery

Turning to activity quickly, fearful symmetry notes that the September quarter balance of payments depicted a broad based inflow of capital, with FDI, portfolio and lending flows all contributing to deficit financing. That resulted in a modest increase in FX reserves despite the record highs for the deficit in both nominal terms and as a share of GDP. Monthly data indicates that these trends continued into the December quarter, while daily portfolio flows have been robust in the month of January. fearful symmetry anticipates that the more supportive environment for capital inflows will progressively underpin improved domestic business conditions, which will be reflected in firmer capex and rising industrial output. The business surveys have shown an improvement in both activity and sentiment in recent months, with the global environment and the domestic political situation both changing for the better. Even so, the lagged impact of overly tight monetary conditions through 2012, presently evident in softening commercial credit growth and drab durables turnover, will constrain the pace of the prospective rebound.

er20130129BullFearfulSymmetry.pdf