ECONOMY: Capital Formation at All Time High

Markets rise on expectations that economy will grow, and economy grows when industries invest more capital in their businesses (called Capital Formation) to increase capacity, to launch new products, or to diversify in other areas.

Gross Fixed Capital Formation in India increased to Rs.5356 Billion in the first quarter of 2014 from Rs 5037 Billion in the fourth quarter of 2013.This is an all-time high.

It is a strong indicator that industrialists are hopeful of acceleration of economic growth in India.India GFCFSource: Ministry of Statistics and Program Implementation (MOSPI).


Several midcap, small-cap, and infrastructure stocks have not appreciated, offering excellent opportunity to investors to enter at current levels. Some slow moving cyclical stocks may surprise the markets.

The markets still offer opportunities for medium to long term investors in Equity Mutual Funds.

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