Signs of pessimism are still pervasive in India’s economy, but the country still has some tricks up its sleeves that may help encourage India’s markets and related exchange traded funds (ETFs).

In a survey of Indian corporations, more than one-third of firms expect a worsening economy and faltering industry performances in the next two quarters as a result of possible declining profits and diminishing sales, according to Reuters India. Most companies attribute the bleak outlook to weak demand, but some see the higher costs of raw materials, staff and credit as the deleterious underlying factors.

The Indian economy is predicated to grow around 7% in 2009, whereas in the preceding years they saw growth of 9% or more. Some economists think growth may drop to 6% this year.

The International Monetary Fund has forecast a worsening outlook of India’s economy on reduced foreign private investments, write Shobhana Chandra and Subramaniam Sharma for Bloomberg.

India’s central bank has cut interest rates to an all-time low of 5% in an attempt to revive investment and spur consumption. The central bank sill has some leeway with its interest rates to further fend off economic slowdowns and the government has also lowered taxes and increased spending on infrastructure.

Domestic carmaker Tata Motors also launched the world’s cheapest car at $2,000 a pop, reports Raymond Thibodeaux for Marketplace. Tata is optimistic about the marketability of its new car and the company may even have trouble filling in the demand, which is expected to be at least one million a year.

  • WisdomTree India Earnings (EPI): up 0.7% in the last month; down 11.1% year-to-date

ETF EPI performance

  • PowerShares India (PIN): up 0.6% in the last month; down 10.9% year-to-date

ETF PIN performance

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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