The sentiment around India seems to have turned a bit cautious given that the markets corrected about 7%-8% from its peak. Now that the momentum seems to be weak, a lot of people are turning cautious because they are also seeing feedback from companies that the economy, the hard economic indicators not looking that good. Lots of companies are selling cement, two wheelers, paints and other discretionary items continuously talking about weak numbers. For example, year on year declines in cement and the bank NPA problems are just not going away.
There are serious issues and therefore the investors are turning cautious. The earning cuts have accelerated. They used to be about 1-1.5% a quarter. Now they have suddenly been 5.5% in the last quarter and there is perceptible fear this was to continue.
What has also happened is that the European and the Chinese economies have shown some promise, the markets have done a lot better and with alternatives available, people think that investors will lose patience with India as well. My own sense is that come 1st of April, the start of a new fiscal year, and the government will do cash accounting and start spending. It will be a breath of fresh air for the economy, and as seen in 2013 and 2014, the June.
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