Edelweiss expects 'above trend' GDP growth

MUMBAI: Edelweiss Securities has in a report said that it expects ‘above trend’ GDP growth to sustain despite some slowing globally, highlighting the uniqueness of the India story. It estimates GDP growth at more than 7.5% in FY08.

”Corporate earnings growth will slow somewhat, with return ratios peaking, tracking top-line growth; our estimate is 17% for FY08,” the report said.

Interest rates will be firm with one more 25 bps hike likely as the RBI balances inflation and growth

Edelweiss Securities said capital spending continues to be strong. It expects M&A and IPO activity will continue and the share of FDI will increase

”Our key theme for 2007 is infrastructure, on the back of a heightened level of spend and announcements,” it went on to add.

Edelweiss feels valuations are now rich and there appears lower tolerance for disappointment. “We recommend investors to budget for volatility - shifting to quality (select large and mid caps that play on the long term India themes) and using the derivatives products for hedging & yield enhancement,” was the advice to investors.

However it warned about the risks as high inflation, lower global risk appetite, higher volatility and UP state elections