GDP growth targets coming down

The latest statements coming from economic analysts seem to indicate GDP growth rates of around 6.4-6.5% in FY09. Both Morgan and Deutshce analysts seem to be saying this. Citi is still above 7% for its forecasts, or so it appears.

This will be the slowest growth rate since FY03, when the economy grew 3.8%. However, at 6.5%, the GDP growth rate is still better than the entire FY98 to FY03 period. So the real issue now will be how much will the GDP grow in FY10. It is too early to say at this point for anyone. The way US is going, it could well be less than 6% growth for FY10, but no way to say.

So where shud the indian market quote? In the FY98 to FY03 period, Indian markets would still quote around 11-13x forward earnings. 11x forward is the bottom of the range for Indian markets. Things are not that bad yet for this to be breached. So will stick to my earlier estimate of 11,000 to 13,000 for BSE Sensex in this scenario till Dec08.