BackInvestment slowdown bottoming out?
The data suggests that the slowdown in investments, which started in 2008-09, may be coming to an end
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On a four-quarter rolling total basis, new investment projects stood at 3.5% of gross domestic product (GDP) in the first quarter of the current calendar year, broadly similar to levels in 2013, as you can see from the chart by Nomura Research. The data suggests that the slowdown in investments, which started in 2008-09, may be coming to an end and new investments are stabilizing, albeit at very low levels.
Most analysts agree, however, that investments are not likely to pick up in a hurry due to weak demand and increased leverage on corporate balance sheets. A gradual upturn in the global growth cycle and a stable government with the right policies may gradually revive the investment cycle over the course of 2015-16, according to Nomura Research.
But the question that arises is: if investment demand is going to see only a gradual pickup, does that justify the 26% run-up in the S&P BSE Capital Goods index since the beginning of February?
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