Global economists are becoming increasingly optimistic about India's economy, in light of the government reinitiating domestic structural reforms, falling global commodity prices and the likely easing of the monetary policy early next year.
Goldman Sachs, the global investment bank, on Thursday said the Indian economy is turning around and it is expecting the GDP (gross domestic product) growth to accelerate to 7.2% in 2014 from 5.4% in the current calendar year.
It also raised ratings on Indian shares to overweight from market-weight, citing growth recovery and a policy reforms push.
The net result was a rally of 328.83 points or 1.75% in the Sensex on Thursday, to close at a 19-month high of 19,170.91. This was the second triple century by the index in two days.
A decline in oil prices in real terms over the next few years, a favourable external demand outlook and domestic structural reforms which have begun in earnest should help boost trend growth, Goldman Sachs economists Tushar Poddar, Prakriti Shukla and Vishal Vaibhaw said.
Others concur that the worst may be over. Some remain cautious, though. Standard Chartered Bank economist Samiran Chakraborty expects growth to be marginal the next fiscal, though it may take some more time to bottom out. Nomura, a leading financial services group, is looking at a 6.2% growth in the next financial year.